Campaigners call for an end to taxpayers subsidising families which tithe

Friday, 27 November 2015

A leading charities campaigner has cried foul over the taxpayer subsidising people's private decisions to tithe to their churches.

Worshippers who donate to churches - including those tithing 10 per cent of their incomes - are among the biggest recipients of tax credits.

This is because when people donate money to a charity, they are entitled to claim a 33.33 per cent tax rebate on their donation, if they had taxable income in the tax year they donated.

Many don't, with Inland Revenue Department figures showing tax rebates are sought by donors on just $58 in every $100 donated.

*READ MORE: Kiwis are 'world class' at giving, but awful at claiming rebates on donations 

Charities researcher Dr Michael Gousmett said the most up-to-date Inland Revenue figures released to date showed around 60 per cent of the donation tax credits claimed were for donations to religious organisations like churches.

Of the $218.3 million in donations tax credits claimed in 2013/14 (not including donations through the Inland Revenue's payroll giving scheme), $136.3m were on donations to religious organisations, compared to just $19m claimed by parents' after making voluntary donations to schools.

This is partly because churches help tithers claim their tax credits, issuing receipts for churchgoers to submit to the Inland Revenue.

In New Zealand charities don't have to pay tax on their incomes which includes the businesses they own, but donors to them are also allowed to claim tax credits.

But Gousmett believes there is too little visibility about whether taxpayers are getting value for money for the lost tax dollars.

And in a secular society, with around 41 per cent of people saying they have no religion, it was time to revisit the use of taxpayer funds to support religions.

Gousmett isn't just picking on churches, which are assumed under New Zealand law to have a charitable purpose because they promote religion.

He said: 'My concern is not so much about the type of charity, but what public benefit they provide.

'Unlike the UK,  the reporting requirements in New Zealand do not require charities to justify their income tax exemption, resident withholding tax exemption, and donee status by stating what public benefit they provide.

'We presume that because charities say they have a charitable purpose, that must be so.'

'I believe we need to follow the UK,' he said.

Documentary filmmaker Toby Ricketts is making a film about the tax breaks religious charities get, including urban mega-churches.

Ricketts said: 'The point my documentary will make is that instead of awarding the tax benefits to people based on what they believe, it should be awarded on what they do.'

A secular society with scarce revenues needed to focus on the value it was getting from using taxpayer funds to subsidise religious charities, particularly if they have amassed great wealth.

The tax credits claimed by individuals for gifts to religious charities in 2013/14 was: 'about half the budget the Department of Conservation has for protecting our forests and animals,' said Ricketts.

The cost to the taxpayer is rising. In 2008 donations tax credits cost $115m.

Asked whether supporting tithing was a good use of taxpayer money, Jo Goodhew, Minister for the Community and Voluntary Sector, praised the work of religious charities.

'Last year New Zealand charities spent over $8 billion on charitable purposes. Many social service agencies are in fact faith-based. These agencies, such as the Salvation Army and Presbyterian Support, are proving essential social services to needy families and people all around New Zealand.'

Charities that applied for charitable status were 'scrutinised to ensure they fulfil a charitable purpose and provide a public benefit', though there was a presumption that a religious organisation was providing a public benefit unless its practices were 'harmful, detrimental to the safety of the public, or against public policy'.

Charities which did not use their resources solely for charitable purposes were liable to be deregistered, she said.

More transparency is coming, even if there is no sign that Gousmett or Ricketts will get the law changes they want.

'From 1 April this year we introduced new reporting standards that require charities to provide clearer information about how they are spending their funds, and how they are making a difference to the community,' said Goodhew.

'Previously, this information did not have to be provided when a charity filed their Annual Return. This information is publicly available so donors can use it to make their own judgments about whether to support a particular charity.'

The Reverend Russell Tomes, ordained minister from the Church of the Flying Spaghetti Monster, is using satire to draw attention to the tax breaks religious charities get, and wants the Charities Act review that was shelved in 2012 resurrected.

He said the Church of the Flying Spaghetti Monster was preparing an application for charitable status, adding: 'We want to take our time and do it properly, rather than give the issuing authority any sort of reason to deny our application.'

That may be wise, as Goodhew said: 'An organisation that is parodying an established religion would not be considered 'serious' enough to qualify. The independent Charities Registration Board recently declined to register the Jedi Society of New Zealand, because it didn't fulfil the criteria for being 'a religion'.

Tomes said: 'Taxpayer subsidisation of religion is certainly questionable, at best.'

But, he said: 'I, for one, would welcome the ability to do all sorts of outrageous tax exempt activities, mostly to get peoples' anger to the state (so) charity law is rightfully revisited and all special treatment and allowances for religion are removed.'

Mark Honeychurch from the NZ Humanist Society believes politicians leave religious tax concessions in place because the general public don't appreciate the scale of them, so removing them will win no votes, but votes would be lost in the religious community for any party that advocated removing them.

TAXPAYERS GET VALUE FOR THEIR PENNIES FOR HEAVEN

Elim Church of New Zealand, which is a cluster of more than 50 charitable trusts, encourages tithing from members, saying: 'The tithe is a very practical and tangible way to put God first in our lives.'

Many of the Elim trusts receive significant donations each year on which tax credits can be claimed. The Shore Elim Church Trust, for example, got donations of just over $360,000 in 2013.

Chris Bethwaite, national administrator for the Elim Church of New Zealand said: 'As far as benefit to the taxpayer goes, the tax credit goes back to the individual that gives, so the individual gets the benefit and the individual is the taxpayer. They are receiving a tax credit for their generosity.'

Bethwaite believed society was getting a good deal.

'The church is the largest social services organisation in New Zealand,' he said. 'From foodbanks, budgeting advice, counselling services, education, fostering, youth and children's programs, parenting seminars, multi ethnic reach, marriage counselling, advocacy housing and much more, there is a lot that the local church is involved in within its community.'

'And a lot of what the church does is through volunteers. If the church and other faith based charities were not doing or providing these services, then who would and at what expense to the taxpayer?'

Professor Peter Lineham from Massey University believed the taxpayer probably does get good value for money from supporting religion.

Engaged, active citizens, who were willing to work to build their organisations were something that brought benefits to a society, he said.

Successive governments had been smart to keep the charitable tax breaks in place for religious charities and those donating to them.

'The reason is by and large a society with a strong charitable notion actually lifts a weight off taxpayers' shoulders,' he said.

But greater scrutiny was called for about the activities of charities, he said, including annual reporting that was easy to understand.

And there were issues that needed debating about the taxpayer subsidising closed off sects like the Exclusive Brethren.