Taxing the Church

The phrase “taxing the Church”, by which Senator Gregorio Honasan’s recent proposal has entered public discourse, is so emotionally-laden that I doubt very much whether – under its auspices — we can get any real discussion going on this issue.

Most people will argue that the Church is doing a good job; why penalize it?  Senator Raul Roco put it so well:  “Government invests P70 billion in our educational system to come up with a good citizen. The churches, when they make you conscious of your duty to God and country, do it for free.  The least we can do is help them.”

It is difficult to imagine why anyone like Senator Honasan would wish to argue against God, country and education.  Perhaps he is misinformed and does not realize the full impact of his proposal?  Or does he seek, as Msgr. Soc Villegas has suggested in his Manila Times column,  to make the Church “more submissive, more quiet and consequently less involved?”

I believe that this manner of reacting to the Honasan proposal does not properly engage a valid issue. It would be useful to begin with what the 1987 Constitution says:  “Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.” (Art.VI,sec.28,par.3)

A related provision refers to educational institutions: “All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties.” (Art.XIV, sec.4, par.3)

What the Constitution clearly exempts from taxes are assets used actually, directly, and exclusively for religious, charitable and educational purposes.  I had Honasan as my guest on TV recently, and, from the discussion, I did not get the impression that he is seeking the abolition of these exemptions.  What he questions is the enjoyment of these tax exemptions by individuals and organizations involved in religion, charity, and education even for incomes and assets not directly or exclusively used  for these purposes.

The Constitution does not give a blanket tax-exemption to religious, charitable and educational institutions.  What it exempts from taxation is only what is actually and directly and exclusively used for religious, charitable and educational purposes.  The question that Honasan, in effect, puts in our minds is this:  How much of the property and income claimed as tax-exempt by religious, charitable and educational institutions should really be tax-exempt?   Does this question make any sense?

Of course it does.  Anyone who has to pay astronomical tuition to exclusive schools every semester has every reason to ask whether all the revenue thus collected actually goes back to education or is shared with poorer students in the form of scholarships.  Anyone who has to pay astronomical hospitalization bills to those medical establishments run by religious orders and church institutions has every reason to ask how all this income is actually spent.  How much of it goes to the maintenance of charity wards?  How much of it is invested in the stock market or in bonds?  When a church or a religious order puts in equity, let us say, in San Miguel Corporation – does it pay taxes on its income from these assets?

The reality of an affluent property-owning church has always been a sore point for people who believe that the real Church must be a church of the poor.  They fear that the logic of capital accumulation has not spared the churches and the religious communities.  They worry that the lifestyles that some members of the clergy have adopted clash with the original identity from which they derive their moral leadership.  It is a distinct sign of hope that such reflections mostly come from within the religious community itself rather than from outside.

In a society as profoundly in awe of religion as ours, to express such misgivings openly may often be perceived as tantamount to blasphemy.  But we must make a distinction between God and the historical institutions that have formed around His name.  All churches are human and social institutions too, and therefore, it is inevitable that some of their members will be susceptible to the same forms of corruption to which ordinary people are prey.

Some of these activities may not necessarily be regarded as corrupt or immoral, but as simply practical decisions made in the name of distant goals.  But I doubt very much if anyone in the BIR today would find enough reason or daring to mount a resolute campaign to monitor the taxable incomes of churches and religious orders.  Maybe Senator Honasan is being overly optimistic when he says that this is an idea whose time has come.

But I would think that there are enough people from within the churches themselves who are not comfortable with the way in which their churches have conducted their financial affairs.  Pope John Paul II has recently focused attention on the advent of the third millennium as a favored time for personal self-renewal.   I believe, as so many church people do, that it is also a perfect time for institutional self-examination and renewal.


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