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Wednesday, January 14, 2009

Charitable status is not a tax subsidy; churches should be governed by the Bible, not the Charter

In a column written for Freedom Press, author and Liberty 100 nominee Dr. Michael Wagner thinks churches could come under increasing pressure to comply with Charter values and not Christian values if they hope to keep their charitable tax status.

In “Charity never fails...but charitable tax status is another matter,” Wagner writes:

In June 2004 the Roman Catholic bishop of Calgary, Fred Henry, posted a pastoral letter he wrote on his website that was critical of Prime Minister Paul Martin. Martin claimed to be a devout Catholic but Bishop Henry pointed out that Martin’s claim didn’t add up. The Roman Catholic Church officially opposes abortion and gay marriage whereas Prime Minister Martin and his government firmly supported both.

Bishop Henry subsequently received a phone call from an official of Revenue Canada requesting that the letter be removed from his website. As Henry explained, the government official “reminded me very forcefully from the beginning that I wasn’t to engage in partisan politics, pointing out that my actions were in contravention of the Elections Act and implying that my actions jeopardized my charitable tax status.”
Bishop Henry refused to be intimidated by the implicit threat and refused to comply with the request for its removal. He argued that he was not in violation of the Act and had not told anybody how to vote. No further action was taken.

This story illustrates a potentially emerging problem that may be faced by churches in Canada. Increasingly, the charitable tax status of religious groups is being called into question by secular humanists. This kind of thinking appears to be increasing among government officials who deal with charities and official charity status.

Charitable tax status for religious organizations will continue to come under pressure by “secular humanists” and other statist, as Wagner suggests, as long as a common misunderstanding persists: targeted tax relief in the form of charitable status is not a public subsidy. Allowing individuals and organizations to keep the income they earn should be a natural and normal state of affairs. Taxation should be considered a necessary evil at best and a distortion of that preferred natural and normal state of affairs. Calling targeted tax relief a subsidy implies that all wealth is public property and that allowing individuals or organizations, from whence this money came, to keep all or part of their money is an act of state benevolence that can be justly retracted.

If the state is subsidizing churches, it will insist on interfering with church affairs, which is preciously why the dictinction between tax relief and a subsidy is essential to make.

As evidence for his concern over further state interference in religious affairs, Wagner sites University of Toronto professor Janice Stein who writes:

If religious institutions are able to raise funds more easily because governments give a tax benefit to those who contribute, are religious practices wholly private even though they benefit from the public purse? Are discriminatory religious practices against women a matter only for religious law, as is currently the case under Canadian law, which protects freedom of religion, or should the values of the Charter and of human rights commissions across Canada have some application when religious institutions are officially recognized and advanced in fundraising? Does it matter that the Catholic church, which has special entitlements given to it by the state and benefits from its charitable tax status, refuses to ordain women as priests?

Again, there is no direct drawdown from the “public purse” that comes as a result of charitable tax status. The money is simply left where it belongs.

At least three libertarian-inspired conclusions can be drawn from Wagner's column: First, the state can not and should not be trusted with civil institutions like the church (or marriage). Second, social conservatives who fear that church charitable tax status could come under attack have many allies in the libertarian movement who applaud those who escape the yoke of taxation. And, third, interference in church affairs is as frightening a notion for libertarian secular humanist as it is for the religiously faithful, or almost as frightening.

You can read Wagner’s column here and buy his book here.

Wagner’s is ranked 75 on the Liberty 100.

Posted by Matthew Johnston

Posted by westernstandard on January 14, 2009 | Permalink


Churches do, in fact, draw back from the public purse. They receive public services like fire and police, benefit from public infrastructure, and receive many other federal, provincial, and municipal services. Since they get services that they aren't paying for, they are in fact receiving a tax subsidy and should refrain from politicking.

I think you'll find that most true libertarians and secular humanists would be more concerned with by churches' attempts to limit the freedom of women to control their own bodies, for instance, than by state attempts to limit the political influence of those churches.

Posted by: Voice of Reason | 2009-01-14 8:29:44 PM

VOR wants to dictate church doctrine in order to support abortion. Others want to change church doctrine to suit their whims. Of course in communist and totalitarian regimes, the religious institutions (when allowed) are government controlled and run by the government. In China the government has even stated (kid you not) that there can be no reincarnation without government approval. VOR should feel right at home there.

Posted by: Alain | 2009-01-14 9:04:07 PM

It is precisely because secular humanists will try to dictate what a church must believe and teach that I have long advocated that church should be able to opt out of the deduction system and property tax relief and other tax provisions. However, a second reason also exists. The deductible status of contribution to churches means that if a church displeases the CRA tax collector a move to deregister them as charity will impose a 100% tax on the church assets. A very powerful hammer that will be used to enforce compliance. Deductiblity is a fatal weakness for a strong and fearless christian witness.

Posted by: gary | 2009-01-14 9:28:29 PM

Perhaps the state will allow tax-exempt churches to contract freely for these services, VOR. Who knows? It might catch on.

Or maybe churches will continue sit on those invoices for unpaid charitable and social services in exchange for garbage pick up.

Asking churches to stop politicking is absurd when the freedom of the church is often the subject of political discussion. What you might call politicking, the church might call self-defence. And should the church not be allowed to comment on marriage, welfare, morality, family, etc.?

Posted by: Matthew Johnston | 2009-01-15 12:59:01 AM

What's ironic is that the "progressives" who want to strip churches of their charitable status if they don't conform to secular values are probably some of the same folks who opposed Bill C-10 as "censorship."

Posted by: Terrence Watson | 2009-01-15 1:27:06 AM

I don't want to dictate what a church does, but if I have to pay taxes, while it doesn't. I see a problem with that.

It is true that the government shouldn't be taxing any of us, it does. If it is going to give tax breaks to some and not to others, than that's a subsidy.

Also, I don't like the fact that I'm taxed for being a good rational person, while the Christian or Islamic faith get a tax break for being irrational.

Posted by: Chris | 2009-01-15 7:31:08 AM

Actually it is ironic Terrence but not surprising. "Progressives" don't see a problem restricting the freedom of those they oppose to bring on what they consider to be a "better world". It's freedom for the left and censorship for everyone else.

Posted by: Charles | 2009-01-15 7:38:20 AM

As a "secular humanist" I am of the opinion that churches should receive tax-free status on activities that are charitable, same thing that applies to other charities. If a church wants to operate a soup kitchen, build a shelter, or provide healthcare, then of course they should not pay tax

Other expenditures related to evangelicism/worship should be taxed like everything else. I fail to see how evangelicism is a charitable activity.

Furthermore, why should churches who impose ideological and community restrictions on their membership receive any benefit? I fail to see how the Catholic Church's institutional bias against women is indicative of religious freedom or expression.

Posted by: Peter | 2009-01-15 9:58:48 AM

Hey Peter,

There is a problem with your argument; it's logical. You have to remember that you're talking to religious people that don't use logical thinking to rationalize things. You have to religiousspeak to them. Unfortunately I'm an atheist and don't know how. Well, I guess I'm a "secular".

I will question the need to give a tax break on "charitable" stuff, since I've seen this type of "charity". Turning away non-believers, is not the type of charity that deserves a tax subsidy. Nor is "Listen to me read the Bible, than I'll help you".

They should pay tax and it's as simple as that. There's a few reasons why.

1st. What makes them so special? How do you form a "religion" and get a tax break? What differentiates "religion" and "cult"? Can I declare my house my church and not pay tax? Do you have to believe in "God" to be a religion? Can money be my "God" in this case?

2nd. If you're going to be intolerant, than you don't deserve any special considerations. Do religions have the "right" to be bigoted intolerant ideologies? I suppose. Do they deserve a tax break for it? Absolutely not.

3rd. The government is supposed to treat everyone equally. It should matter if you're a church or Walmart, you should be treated equally by the government and taxes come along with it.

4th. It is a subsidy. If you get the benefits of the government without pay taxes, than you're subsidized. End of story.


Unfortunately, this is a "logical" argument based in the "reality" that "exists" and religious people won't get it.

Posted by: Chris | 2009-01-15 11:30:14 AM

I don't know how the tax code is written in Canada, but in the US "religious organizations" don't need to file for an exemption. They are automatically exempt according to the First Amendment to the US Constitution and the IRS's own code. Despite this fact, most churches here choose to incorporate and become 501c3 non-profit entities chaining themselves unnecessarily to the dictates of the state. The problem, brethren, is man's selfish nature, including those men who are charged with managing God's churches. The state dangles the bait and we bite the hook every time. Tax exempt status isn't the only option, but if it was, I'd rather pay the tax than wear their yoke.


Peace, Bryan Morton

Posted by: Bryan Morton | 2009-01-15 11:56:47 AM

I have more of a problem with the restrictions on political speech by charities and churches than I do with the assertion that the ability to issue tax credits is a type of public assistance.

Posted by: Janet | 2009-01-15 12:04:55 PM

when its no longer advantageous to grant churches tax exempt status the government will tax them; its all about keeping votes, nothing else

Posted by: x2para | 2009-01-15 12:21:29 PM

Churches need tax free money to send back to the "Holy Land" so they can continue to kill each other like they have been doing for the past 2000 years or so.

Posted by: glen | 2009-01-18 6:07:27 PM

As a church-going & tax-exempting donor for many years, I have often argued that the best thing for the church would be for it to lose it's tax-exempt status, and consequently for me to lose my charitable donation tax credit.

However, I've held this not on the basis of some of the arguments put forth in these comments (many of them are uninformed & bias), rather because it frees the church from the chains of the state.

There are many who claim to be "christians" and who contribute because it is advantageous for them, both internally church politically and from a tax perspective. These are often people who use their "contributions" to manipulate the church leadership who have become dependant on donors rather than on God.

While removal of the tax exempt status will free the church, it will burden the state. Freedom of the church will come as it's members will quickly be filter: those that love and support the church, those that seek it for political or social or self gain, along with those clergy who love & trust God vs those who are in it for a job.
The state will become burden with having to maintain both the social programs as well as the property that the church will no longer afford to operate.

Posted by: Dan Knight | 2009-02-16 9:42:13 AM

It's ludicrous that religions are tax-exempt... they're based on unfounded supernatural hooey and are divisive and exclusionary (to the 'unredeemed'). If there are charitable activities beyond spreading this swill around, keep that portion tax exempt, but tax all the silly 'worship' tripe, including the often expensively placed properties.

Appraise the Lord - Tax the Churches!!! (Thx., Frank)

Posted by: Brett Aubrey | 2009-06-07 9:42:47 AM

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