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CoE facing £20 million VAT bill: The Church of England Newspaper, April 29, 2012, p 6. May 6, 2012

Posted by geoconger in Church of England, Church of England Newspaper, Development/Economics/Govt Finances.
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Tony Baldry MP

The Government’s plan to end the VAT exemption for listed building alterations will cost the Church of England an additional £20 million per year, the Second Church Estates Commissioner told Parliament last week.

On 18 April 2012 Mr. Tony Baldry responded to a written question from the member for The Wrekin, Mr. Mark Pritchard (Cons.) asking whether the Church Commissioners would speak to the Chancellor about the financial effects “of VAT changes to repairs for listed church buildings in the diocese of Hereford and Lichfield.”

Mr. Baldry stated that he wrote to the Chancellor of the Exchequer on 22 March and intended to “follow this up with discussions soon.”

Ending the VAT exemption was likely to cost the Church of England £20 million per year as it had “responsibility for the care and upkeep of 12,500 listed churches and cathedrals across England.”

There repairs were “largely met by the voluntary giving and activity of its congregations,” he said, noting the “large majority of alterations” took place “order to improve access to them and to broaden their use by the wider community.”

The cost to Hereford under the proposed VAT changes would cost the cathedral “an extra estimated £160,000 to complete its existing plans to improve its sound, lighting and heating systems.”

Mr. Baldry said that of the Hereford’s 423 buildings, 360 were listed churches. He cited the case of St John the Evangelist in Shobdon, which was “currently completing a £900,000 restoration project of which only 10% has been completed. The application of VAT to the total cost is likely to prove a significant setback.”

In the Diocese of Lichfield the proposed changes would add a further £240,000 to its costs of adding “toilets and facilities for the disabled” and renovations to the Close.  Of Lichfield’s 450 buildings, 315 were churches who would be affected by the changes.  “No specific figures are available for projects in 2012, but across the diocese a conservative estimate of over £300,000 was spent on alterations to parish churches in 2011,” he said.

The Second Church Estates Commission noted that “though proposals in the Budget impact mostly on alterations to listed church buildings—as distinct from repairs—in that they remove the zero VAT rating for all listed building alteration works, the Church of England is concerned that the money available to reimburse churches for VAT charged for repair work will also be affected as a consequence of the extra demands placed on the Listed Places of Worship Grant scheme, which is to have eligibility widened to include alterations.”

First printed in The Church of England Newspaper.


Idealism and Italian Taxes: Get Religion, February 16, 2012 February 16, 2012

Posted by geoconger in EU, Get Religion, Politics, Press criticism.
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Plans to end property tax exemptions for the Catholic Church are one of the top stories in the Italian press this morning. On 15 Feb 2012 Italian Prime Minister Mario Monti released a statement saying he will introduce legislation requiring the Catholic Church to pay taxes on all its commercial properties.

Reporting on church – state issues is hard enough for American newspapers, covering overseas disputes is near impossible for most. The amount of information needed to bring a reader up to speed before he can appreciate the issues often serves to prevent a story from every being written.

The only English-language story I’ve seen on this breaking news item comes from Bloomberg BusinessWeek. It does a fair job of summarizing the facts, but is unable to give the story any context. Which will likely mean that this story will be given a pass by U.S. editors. That would be a shame.

Some GetReligion comments have argued that the effort in reporting overseas religion stories is not worth expending. They follow the Neville Chamberlain line.  Speaking of the need to appease Hitler in the face of his demands for the Sudetenland the prime minister told the House of Commons:

How horrible, fantastic, incredible it is that we should be digging trenches and trying on gas masks here because of a quarrel in a far-away country between people of whom we know nothing.

No trenches here, but how much time should the U.S. press devote to a religion story from a far-away country and about a conflict of which we know nothing?

But lets put a stopper in the philosophical bottle and turn to the story … The key points from Bloomberg are:

The church currently pays property tax only on buildings designated as “purely commercial,” based on an Italian law originating 20 years ago and extended in 2006. The wording is ambiguous when it comes to clinics that have a chapel or monasteries that offer bed and breakfast accommodation.

The Catholic Church owns about 100,000 properties in Italy, a third of which are commercial, according to the Italian Radical Party, which historically has challenged the church.

Bloomberg offered this background detail explaining the prime minister’s announcement.

Following a complaint by the Radical Party, European Union regulators opened a probe in 2010 into Italian tax breaks on real estate granted to the Catholic Church, saying they may distort competition.

The outcome of the investigation will be made public by next month and if the decision goes against Italy, the EU could order the country to pay a fine and to demand that the church reimburse the government for unpaid taxes of the last five years, the secretary of the Radical Party, Mario Staderini, said in an interview in Rome on Dec. 21.

Does this tell the full story? Reading the Bloomberg report by itself one would miss some key issues and perhaps draw some false conclusions. The Radical Party’s request for EU intervention arose from its belief that the state’s policy of not taxing church property was anti-competitive. It gave the church an unfair advantage by reducing its costs and allowing it to undercut its commercial competitors — or serves as a form of state subsidy to the church.

The Italian press agrees the church should pay property taxes on commercial real estate — which is somewhat extraordinary. The great fun of the Italian press is that it offers a Rorschach test of the Italian psyche. All of the newspapers are working from the same inkblot, but they see different things emerging from the darkness.

The moderate middle is pleased the Catholic Church is paying its fair share. It also hopes this announcement will silence the perpetually aggrieved anti-Catholic left. A front page article entitled “Ici, svolta sui benne della Chiesa” in La Stampa, (the Turin-based newspaper has the largest circulation in Italy and is center-right in its politics) stated the Church:

is responding cautiously in courtly style .. while the antiecclesiastica (anti-clericalists) are satisfied even though the measure will not be complete as many had hoped.

However La Stampa notes that some of the criticisms and claims from the left are simplistic as there is no one entity known as the church that owns property.

Arriving at a revenue figure from church owned properties is a very complex task. The properties are owned by a galaxy of legal entities different, ranging from dioceses to congregations, religious orders to the Italian property of the Vatican itself.

Writing about this controversy in January before the prime minister’s announcement, the Guardian took a different line, likening the tax exemption to tax avoidance. What do you think of this opening?

It has long been regarded as more of a national sport than a misdemeanour. And it has long benefited from the seemingly boundless indulgence of the Italian Roman Catholic church.

But now the head of the Italian bishops’ conference, Cardinal Angelo Bagnasco, has unambiguously declared that “evading taxes is a sin”. He called for “serious, effective and relentless” action against tax dodgers.

The cardinal’s remarks are a boost to the technocratic government of Mario Monti, which is running a high-profile drive to root out evasion as it struggles to eliminate Italy’s budget deficit and start paying back the country’s €1.9tn (£1.6tn) public debt.

Among those often accused of avoidance, if not evasion, is the church itself. Its premises are exempt from property tax.

This is comically bad and plays into national stereotypes. Those eye-ties are all crooks at heart, the Guardian tells us.

Avvenire, the newspaper owned by the Italian Catholic Bishops Conference (CEI), notes that many newspapers seem to have missed the point that this new law applies to all non-profits — not just the Catholic Church.

… it should be remembered for the umpteenth time, this category [tax exempt institutions] is not identical with the Catholic Church, it includes properties of faiths who have registered with the the state and extends to all non-profit entities. Without this necessary clarification (that often the media tends to “forget” as happened yesterday), they will want to read the full official statement …

With regard to exemption from local property reserved for all non-commercial entities the Prime Minister and Minister of Economy and Finance, Mario Monti, told the European Commission Vice President, Joaquin Almunia, that it intends to present to Parliament an amendment to further clarify and define the question.

Avvenire argued the “real news” from the prime minister’s announcement was that the government was going to introduce a:

mechanism tied to strict guidelines established by the Minister of Economy and Finance to the identify the proportional relationship between commercial and noncommercial activities performed within the same building.

The official line was offered by Msgr. Domenico Pompili.

We look for the exact wording of the text so that they can express a detailed opinion. … As has been stated several times, and most recently by the President of the CEI, Cardinal Angelo Bagnasco, any intervention aimed to introduce clarifications to the existing formulas will be received with the utmost care and responsibility.

One must also look to the reason for the exemptions, Msgr. Pomili said, adding we “hope the state takes into account the social value of the vast world of nonprofits.

So where is the problem? The Bloomberg story is correct, but the Catholic newspaper would say that it missed the point that not-for-profits in Italy are not the same thing as the Catholic Church — and that they are willing to pay their fair share. The Catholic argument that the church provides social services — and that was one of the reasons the tax exempt law was introduced twenty years ago — is also missing.

But these surface issues don’t speak to the question of the relationship between church and state. The European Union is intervening in Italy (at the request of one Italian political party) to re-order the relationship between the state and the Catholic Church. EU values and EU law trumps Italian values and Italian law.

What does this intervention mean for established churches — like the Church of England, the Church of Greece, the Church of Sweden et al? What does this mean for the individual believer when transnational entities have supremacy over the political aspects of his life in issues ranging from abortion, euthanasia, gay marriage, or immigration. How far can the EU go to press its agenda on individual states?

And then there is the question of idealism in reporting. Should newspapers concern themselves with the happenings of people very far away debating issues of which we know nothing? Is knowledge of the wider world a form of Orientalism — as defined by Edward Said — where we safe at home can view the doings of the other with detached amusement? Or are there universal themes or norms played out in the world which are relevant to us — even if they take place in the back of the beyond? Or, as the Guardian might put it, what more could we expect from Italians and Catholics?

What say you GetReligion readers?

Basilica of St. Peter photo courtesy of Shutterstock.

First printed in Get Religion.