The Greek Orthodox Church, and our big, fat, Greek-style economic funeral?

Australia has a net foreign debt of about $950B. It is growing steadily month after month as we borrow to pay for expenditures that are not covered by taxation. While it is relatively low by international standards its continuous upward spiral is a serious concern.

The tax avoidance of corporations, the many distortions of our tax system to favour the wealthy, the developing demographics and inequalities of Australian society requiring increased welfare expenditures, the folly of having so much capital tied up in unproductive property bubbles, are by far the most serious aspects of the budget deficit problem.

This deficit is thrown into relief, as it is now, when the terms of trade, especially the price Australia receives for its major exports, iron and coal, declines.

At this point in time, the income received from agriculture, tourism, services and manufacturing is not enough to compensate for the decline in the price of iron and coal. Hence the ongoing sale of major pastoral properties, and other high-value assets, to foreign, mainly Chinese investors, by a nation always gasping for revenue.

It is in the context of this slowly worsening situation that religious organisations continue to get a free, tax-exempt ride. So, how much does religion cost Australia? To what extent would it help if religion, and other alternative life-stances to religion, were taxed?

On 28 and 29 June 2010 a Senate Economics Legislation Committee inquiry, encouraged by Senator Xenophon, took related evidence on these matters. The purpose of the inquiry was to introduce legislation for a 'public benefit' test, used in the UK to deny Scientology tax-exempt status. Senator Xenophon, understandably, wanted to nail Scientology in Australia and saw this test as a way to get at them.

The evidence given to the inquiry by officers of the Productivity Commission, the Treasury, the Australian Tax Office (ATO) and the Australian Christian Lobby (ACL) on 29 June 2010 was more broadly revealing. Here are some edited highlights from Hansard:

About the cost of religious charities of all kinds:

Senator Cameron: Do you have any idea how much public funding, through tax breaks, goes to those mainstream religions for charity work?

Mr Shelton (ACL): I would not know off the top of my head, but it would be a great deal …

Senator Cameron: Is it the case that you don't know off the top of your head or you just plain don't know.

Mr Shelton (ACL): I do not know.

Senator Cameron: That is more accurate, because the Productivity Commission, with all their economists, could not tell us … (further) … there is a complete lack of transparency in terms of the expenditure of public money … (further) the Productivity Commission analysis of the cost to the public purse in supporting charities … ranges anywhere between $1B to $8B …

Ms Roussel (ATO): In the tax expenditure statement, the itemization for charities in unquantifiable … there is no official number.

About the number and accountability of religions:

Senator Xenophon: … what quantum, what number, of religions would you say are out there whereby, unless they become visible to you from some of their activity, you would not know they existed as such?

Mr Hardy (ATO): [religious organisations] … do not have to lodge an income tax return. If they have no reason to have a dealing with the tax office in any other capacity then they have no dealing with the tax office.

Senator Xenophon: Do they have to advise you of their self-assessment [that they are not taxable]?

Mr Hardy (ATO): No. Self-assessment is that. They self-assess.

Senator Xenophon: In other words, they are left alone. They have self-assessed and you do not have any reason to monitor them whatsoever.

Mr Hardy (ATO): No. The legislation does not provide for that. They are potentially invisible to us as a taxation entity.

So, there it is in black and white. No government official really knows how much religious

charities are costing Australia or even how many of them exist. The Productivity Commission, the ATO and the Treasury have chosen not to research this. Why? Nobody knows how many religions are 'self-assessing'. Why? When the Australian Charities Commission (ACNC) was set up later in 2012 religious organisations alone were given an exemption from reporting their wealth. Why?

Interestingly, when the Committee's report came out the cost of religion to Australia roughly calculated by Perkins & Gomez to be annually $31B in gross terms. made as a written submission to the inquiry was ignored and the $1B - $8B figure was used to apply to religious charities generally.

This was tantamount to a cover-up. In 2012 Ryan Cragun and his associates, with the benefit of better information on the public record, reviewed the cost of religion to the United States: US Loses Over $71 Billion in Religious Tax ... - Center for Inquiry

But, in fact, the Xenophon inquiry turned on a furphy.

There is no 'public benefit' from religion or any other belief. As has been said many times, the so-called 'benefit' of religion is a 17thC presumption dating from the original charity law of 1601. Four hundred years later, it is irrelevant.

Interestingly, two months before Senator Xenophon's inquiry, the church he personally identifies with, the Greek Orthodox Church, in the face of Greece's major, ongoing financial crisis with the European Union, was obliged to pay taxes.

This extremely wealthy state church, which treats Greece as its own theocratic state, was in 2008-9 the subject a major financial scandal concerning the historic Vatopaidi Monastery.

The monastery was in involved a dubious land swap involving Church and government officials benefitting the Church to an estimated tax-free $1-2B. An abbot was gaoled in 2011.

In the wake of this scandal, maybe as a face-saving operation, on 23 April 2010 many tax exemptions for the Church were repealed. The Greek Orthodox Church now pays

• A tax on their substantial real estate (being, like the Catholic Church in Australia, the largest land holder)
• A 20 per cent rate of tax on rents they receive from their real estate
• A 3 per cent tax on revenues from edifices and leased lands
• An advance payment of tax on their future likely incomes
• A trivial .5 of one per cent on inheritances and donations
• Some stamp duty fees on property sales

So, it seems, Greece has shown what has to happen for a church to concede that it should pay taxes: an economy on the brink of collapse, accompanied by a major church scandal, which requires at least some taxation penance.

Also, the Greek Orthodox Church has emphasized it is continuing to do genuine relief of poverty work even though it is now being taxed. This is important because Australian churches typically say their welfare work would be affected if they had to pay tax, and besides, the value of the work they do can be reconciled to the missing tax-exempt revenue.

This line is known as the 'cross-subsidy' argument.

This line is used constantly despite the fact that (1) many religions do no charitable work at all because they do not have to, because religion itself is legally a form of charity, and (2) many religions just do a cosmetic amount of charitable work which is (3) difficult to assess if their incomes and expenditures are not made public, especially because (4) they have an exemption from reporting their wealth to the Charities Commission and (5) many religious charities of the good works variety receive significant grants from governments for their activities which they forget to mention when they make claims about the charitable works they do.

With those caveats in mind, the Greek decision to pay some taxes and carry on with their genuinely charitable work demonstrates that churches can do both. Having said that, should it have to come to a Greek-style financial crisis before a church pays tax?

To his credit, the fourth president of the United States, James Madison, saw all this religious wealth coming. In his 'Detached Memoranda' written sometime after 1811, he warned the new United States to keep a watch on how much property churches could acquire because they would continue to build wealth indefinitely into the future, to the extent that they would lose their very purposes of the founders of their religions.

The warnings went unheeded and what President Madison predicted has happened. In the June 2015 issue of the French magazinel'idée libre, Rob Boston summarized the wealth of the Religious Right in the United States that has evolved alongside the wealth of the mainstream churches from the 19thC:

• The top ten Religious Right groups in the US raise more than $1B each year;
• This money is used for lobbying Congress and arguing legal cases against secular law;
• Pat Robertson's Christian Broadcasting Network raises $300M annually and has an endowment of $2B;
• The Christian 'American Center for Law and Justice' have a budget of $62M per annum;
• Jerry Falwell's Christian 'Liberty University' in Virginia has an annual budget of $885M;
• The Christian 'Alliance Defending Freedom' spends $40M annually in legal actions against secular law;
• The Christian 'Family Research Council' spends $13M;
• The Christian 'American Family Association' spend $20M on political actions;
• The Catholic 'League for Religious and Civil Rights' has assets of $35M.

In theSydney Morning Herald 12February 2011 Jessica Irvine ('Tax breaks add up to a big minus') queried fringe benefits for the religious, among others, in Australia . Fringe benefits are mortgage payments, car expenses, children's school fees, and sundry other things, that ministers of religion are able to take in lieue of taxable income. On 20 June 2007, NSW MLC, John Kaye, detailed in the parliament how a Christian sect in Sydney exploited this tax break to its fullest extent.

Irvine's senior economics colleague at the Herald, Ross Gittins,has just published his biography. Turns out he was raised in a Salvation Army family. While he has described himself as a 'backslider', the term Christian sects use to denounce those that have moved away from the faith, he informs us that at census time, sentimentally, he still puts himself down as a member of the Sallies.

I thought it was curious that Gittins has never turned his considerable forensic mind to the tax breaks for religion. Now, all is clear. It seems he is a big fan of the British Christian philosopher, Michael Schluter, who has tried to 'turn the UK back to Christ'.

It seems likely Gittins has bought the 'cross-subsidy' argument described above, for in a 18 April 2014 interview with the ABC he said 'the archbishops of the world should be out there putting in their spoke' about social justice issues. Would that include the Anglican archbishop of Sydney who lives in a $30M pile with views of Sydney Harbour while there are hundreds of homeless living on Sydney streets?

And, there is a problem with the Sallies. In 2012 we (NZARH) were able to research just how wealthy churches are in New Zealand as their Charities Commission, as it was once called, does have a wealth reporting requirement.

We found the Salvation Army had $425M in equities and $17M sitting in NZ banks. At the same time, there is good evidence, that despite New Zealand's relatively sound economy, that a quarter of its children are living in poverty. There are many ways some of that $17M could be spent. Why aren't they spending it? Also, we found the Seventh Day Adventists (owners of Sanitarium) had a whopping $37M in the bank.

So, to the question of much religion is costing, after discounting the value of the charitable work churches do, significantly funded by government, the likely answer is between the higher figures cited above: somewhere between $8B and $31B.

I suggest Australia could do with some of that, as month by month, if the terms of trade do not reverse, we move ever closer to a big, fat, Greek-style economic funeral.