4 MAY 2010




The Rudd government has not only drawn back from the ‘moral issue of the century’, - the ETS. It has also drawn back from

§        Limiting exemptions for religious institutions recommended by the Henry Tax Review  and

§        Ending Discrimination on the basis of religion

Henry Tax Review

The Herald Sun of May 4, 2010 reports that the government has ruled out removing certain tax concessions that are helpful to non-profit organisations and charities as recommended by the Henry Tax Review.

The ALP and Rudd’s polls are now behind that of the Coalition on a two party preferred basis. This is just another of Rudd’s risk-averse policies that are starting to bite in the minds of those who voted him in at the last election.

Citizens and taxpayers in Australia have long been restive about the exemptions enjoyed by religious groups whose bank balances are bursting with taxpayer dollars, whose commercial enterprises are thriving at the expense of local business, as their church pews empty of those seeking spiritual guidance.

Max Wallace, the director of the Australian National Secular Association and author of The Purple Economy: Supernatural Charities, Tax and the State provides the following historical summary of the ongoing battle against the enormous raft of taxation exemptions enjoyed by religious institutions. Sectarian schools in this country enjoy a whole raft of taxation exemptions. Name the tax: they don’t pay it. These taxation expenditures amounting to more than $80 billion dollars are unlikely to be even mentioned by Gillard’s Funding Review. For the information of our readers however, DOGS quote from Max Wallace’s article Render unto Caesar published in the Australian of August 8, 2008.

THE Treasury review of tax concessions offered to the $80billion non-profit sector marks a policy turning point that has been a long time coming. One of the most contentious concessions has been the tax-exempt status of commercial businesses run by religious organisations. This privilege is not conceded in many other comparable liberal democracies.

The questioning of this privilege has occurred sporadically in the past century. In 1905 the Catholic Church was running a commercial laundry at its convent in Sandy Bay, Hobart, an Australian Magdalene laundry. The local council argued that if it was running a business from this site, it should not be exempt from local council rates. The council's attempt to withdraw this privilege failed.

In 1930, Anne Lennon railed against the tax privileges of the churches on her soapbox in the Sydney Domain behind the NSW Parliament House. She was arrested, as the free speech laws we enjoy now were not so liberal then. The Rationalist Association of Australia appealed her case and lost.

On May 20, 1936, when the first federal Income Tax Assessments Act was being debated, the question of religious organisations running tax-exempt commercial businesses arose. Senator James Arkins said: “If there is anything in the allegation that such bodies are using the cloak of Christianity to make profits without paying taxation, it is about time that legislation was framed to check them.” Nothing was done.

The issue went quiet for almost a half century before senator David Hamer asked on May 1, 1984, whether it would be practicable "to separate, for tax concession purposes, the charitable activities of a religious body from its other activities". Senator Peter Walsh replied, "I believe there would be considerable practical difficulty in separating the charitable activities of a religious body from other activities. Legally, the advancement of religion is a charitable activity."

This needs some explanation. The Statute of Elizabeth (I) of 1601 created four heads of charity: the relief of poverty; advancement of education; advancement of religion; other purposes beneficial to the community. Historically, monarchs and churches had usually been tax-exempt.

This statute opened up the field. Its reach, in terms of religion, was tested in the 1891 Privy Council Pemsel case in which the United Brethren sought to have tax exemption for its activities among heathen nations.

In a split decision, the council found the extension of Christianity to other cultures was a form of charity.

The question of the tax-exempt commercial income of religions arose again in the parliament on December15, 1992, when senator Bob McMullan said the Labor government was not too happy about the Seventh-Day Adventists' Sanitarium being tax-exempt, "but the attempt to disentangle that would be too difficult".

On September 23, 1997, federal Liberal member for Cook Stephen Mutch raised the case of the Little Pebble, a cult leader subsequently jailed for a sexual offence against a 15-year-old girl. This "chip off the block of St Peter" was well aware of his tax-exempt status and was using it to fund his activities.

All religious organisations that satisfy the legal definition of religion in Australia are tax-exempt. The Australian Taxation Office makes these determinations when organisations apply. The definition of religion in Australia was decided in the 1983 High Court Scientology case, in which the court defined religion as any belief in a supernatural being, thing or principle and canons of conduct that give effect to that belief. An organisation must have a building, be paying a stipend to a minister with a congregation, perform rituals and be open to the public.

Second, in Australia, under our charity law the dominant purpose of a religious organisation's activities must be the "advancement of religion". It does not matter if the religious organisation is running a commercial business, so long as the dominant purpose of the activity is religious.

This opens the door for any religious organisation to tithe its members, parlay the donations into a considerable sum, then invest it in a commercial business or investment whose profits will be tax-exempt. All things being equal, with tax-exempt status, a business can grow quickly. There is no requirement for any of these profits to be applied to the relief of poverty or any of the many other charitable causes because the advancement of religion, that 17th-century idea, is deemed to be charitable in itself. It does not matter what kind of religion it is, so long as it has a supernatural belief.

In the US, Republican senator Charles Grassley of Iowa is heading an investigation by the Senate finance committee into six televangelist ministries whose leaders openly flaunt their wealth. The question is whether this is an abuse of their tax-exempt status. Grassley remarked pithily: "Jesus came into the city on a simple donkey. What are disciples of his doing flying in (private) jets?"

In 2000, the Howard government set up the charities definitions inquiry. One of its recommendations was the creation of a charities commission to begin some oversight of this growing sector of the economy. The government refused to respond to its own inquiry's recommendation that a commission be established. Last year, New Zealand created a charities commission.

The Rudd Government is asking Treasury to question why disentangling the revenues of the commercial activities of religious organisations from their other revenues is too difficult. If other countries don't have that difficulty, then why does Australia?

Related Coverage

Discrimination on the Basis of Religion

The Rudd Government has said it would review the four federal anti-discrimination laws with a view to merge them into a single act.

In an article in the Age May 3, 2010 entitled ‘Rejig of discrimination laws should enshrine equality for all,’ Dr. Dominique Allen of the Australian Catholic University claimed that at present the government merely deals with discrimination on a ‘case by case’ basis and there is no institution that ‘can make sure that people are given a fair go at work’.

She appears to be most interested in questions of employment and discrimination on the basis of ‘sex’ in this country. But the discrimination leading to widening of social and economic inequalities in education relates to the ability of institutions like those that run her university being able to avoid discrimination and taxation laws altogether. She makes no mention of discrimination on the basis of religion, marital status, sexual preference, or a combination of all three.

In Australia religious institutions have become sacrosanct in a raft of laws which favour religious discrimination. From religious exemptions flow a number of other moral requirements of staff, parents and pupils.

Teachers, pupils and parents meet up with discrimination when they adhere to a belief system contrary to a religious school or institution in which they wish to earn a living or acquire an education. They can also be deprived of a living or education on the basis of marital status or sexual preference. How many men and women currently employed by religious schools substantially funded by the taxpayer are in fear of losing their job because they are ‘living in sin’?

What will happen to such teachers, parents and pupils when the public education system, which is open to all regardless of  class, creed, colour, culture, is swallowed up in the private sector?

Citizens and taxpayers in Australia, tired of the posturing of the risk-averse Mr Rudd and iron-man Abbott are looking to alternative politicians . They are asking questions like the following:

Is freedom of and from religion, freedom of conscience, a personal matter for a man and his God, or a system of taxation and employment laws imposed by those seeking power over people’s minds and opportunity to make a living?



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