Supernatural privileges

A review of The Purple Economy: Supernatural Charities, Tax and the State, by Max Wallace.

This book fills a much needed gap. It is a gap in our ability to think more rationally about the appropriate role of religion in society. It is a gap in our perception as to whether the privilege, the status, and the financial advantage that we confer on religion are actually justified. At least, it is a gap that many think that we need. Others of us, who think that we decidedly do not need such a gap, will welcome Max Wallace's contribution.

Why is there a gap? Despite the popularity of books such as "The God Delusion" by Richard Dawkins, there is a kind of political correctness that surrounds religion, where religions cannot be criticised for fear of offending cultural sensitivities. Instead, as a society, we pretend that there are multiple religious realities that are all equally valid and true.

If all this is a mystery too hard to comprehend, then perhaps applying some economic rationalism to religion may succeed where rationalism has failed. The problem is that religious enterprises are accorded tax exemptions, whether their activities are charitable or not. These amount to at least $500 million annually (but possibly billions), that other taxpayers must make up out of their own pockets. All taxpayers are affected.

The Purple Economy exposes the inequity of this anomaly in detail. No-one is suggesting, of course, that religions do not perform charitable works. It is just that they are accorded financial privileges that other charities are not. In Australia, they are accorded more privileges and concessions than in almost any other comparable country, and are the least accountable. How we arrived at this situation and what it means, is the subject of Wallace's book.

In order to gain tax free status, a religion, sect or cult need not demonstrate its ability or even inclination to perform charitable works. It just has to demonstrate a capacity for supernatural belief. It is then just assumed that the charitable works will justify the concessions. Legally, religions are charities with a supernatural belief. Hence Wallace refers to religions throughout the book, and in the subtitle, as "supernatural charities". It may not be a terminology that will catch on, but it certainly serves to highlight the necessary criterion for achieving privileged tax status.

The book is divided into two parts, and the first part into three sections. The relationship between the section titles and the content of the chapters therein is not always clear, as the book is a compendium of information, thoughts and observations collected over a period of time.

The central theme of the book is that religions have accumulated billions of dollars in wealth over decades, if not centuries, due to their tax free status, and that they are not accountable for the management of this wealth or the income derived from it. Just as the income and wealth derived from criminal activities is described as the Black Economy, the financial dealings of the religions similarly provide no tax revenue and are unaccounted for. Hence the title, the Purple Economy.

The first section of the book "Church and State" goes into the historical developments that have led to the current situation. How is it that even the commercial activities of religious enterprises are considered to be worthy of tax free status? All religious works were deemed to be charitable according to the 1601 Statute of Charitable Uses. After over 400 years this still remains in effect in Australia.

The last time there was a major debate about these matters in the Federal Parliament was in 1936, in relation to the Tax Assessment Act. It was again upheld that all that the works of religious organisations were basically charitable and that therefore they were entitled to blanket tax concessions. "Charitable activity" is not defined in legislation but is left to case law.

Currently, federal exemptions apply to income tax, fringe benefits tax and the GST. State government exemptions cover land tax, payroll tax, stamp duties and car registration fees. Local government bodies give exemptions from municipal rates. The Melbourne City Council estimates that these concessions are ten per cent of revenue.

Over time, these concessions have enabled the churches to accumulate great wealth. Wallace cites an estimate of "supernatural charity" annual income exceeding $20 billion. The Catholic Church is the largest property owner in Australia. All charities have tax free status, and deservedly so, but it is only for supernatural charities that this extends to their commercial operations. The obvious equity question is why should the average taxpayer have to support the activities of cults, sects and religions that they do not believe in or agree with?

It is commonly thought that Australia is a secular country but this is true only in a limited sense. There may be no established state religion but there is also no "separation of church and state". Section 116 of the constitution was intended to provide such separation, but this interpretation was rejected in the High Court's rejection of the Defence of Government School's challenge to the provision of state aid to religious schools in 1982.

Catholic witnesses to the High Court argued that religious instruction in their schools was "about" rather than "for" religion, and that therefore Catholic schools did not in any way promote Catholicism. This is a rather ludicrous argument that has hardly been heard before or since, yet the majority of High Court judges found it convincing.

The book relates some interesting arguments as to what the proper role of the state should be regarding religion. The state should be impartial between religions. This is arguably the only element of secularism that exists in Australia. The state should not "advance religion", but it undoubtedly does, both in the form of preferential tax concessions, and in the form of subsidies to religious schools, which have increased enormously since 1982.

We have freedom of religion in Australia but not freedom from religion, it is argued. The state should be neutral, that is it should be non-religious, neither pro-religion nor anti-religion. The state does not provide funds for atheists to promote atheism so why should it fund religionists to promote religion? It is this type of question that the book is very valuable in raising.

The rest of the book provides further anecdotes, case studies and evidence as to the inequities and anomalies that currently exist due to the inability or unwillingness to treat religion on a rational basis. Religious oaths and prayers in parliament provide state endorsement of a monotheistic religion.

In the section on "Government and the Supernatural", Wallace recounts numerous instances of the questionable behaviour of religious institutions and personnel. The Vatican, which via the Vatican Bank acts like a multinational corporation, runs over 49 casinos in Europe. In NSW there are many Catholic Clubs which generate large poker machine revenues.

In the section entitled "Interactions", Wallace investigates the political machinations that give rise to the acceptance of the status quo. A political stalemate exists where major parties are intimidated into maintaining tax concessions and funding to religions. They may be mostly low key on the issue but if the supernatural charities feel that their interests are threatened, their influence can become toxic, Wallace says.

This is despite the fact that most people favour the separation of church and state. Wallace cites a 2006 survey carried out for the Secular Party of Australia and the NSW Humanist Society, in which the majority favoured a new law to separate religion and government in Australia. In a prior question, most also correctly thought that such a law did not already exist.

People are generally concerned about discrimination, but not when it comes to discrimination against the non-religious. If a couple is married in a church, GST is not payable but for a secular marriage ceremony, it is. Discrimination on grounds of religion is generally unlawful. Wallace describes his own attempts to raise this instance as a case of discrimination against the non-religious with the Human Rights and Equal Opportunity Commission. Basically they refused to even consider the case.

Tax exempt charitable trusts must file audit accounts, and apply at least 85 percent of their income to charitable purposes but religious institutions need not. Any HREOC finding on discrimination would therefore have large implications, which they would rather avoid.

Another anomaly occurs with Christian job agencies. They are allowed to discriminate on grounds of religion in recruiting staff for their own agency, but they cannot recruit clients to their own faith. Further, Wallace cites various Census results on religious adherence, which show a large increase in those stating "No religion" in 2006. This was about 30 per cent, including "Religion not stated".

Wallace cites the ability of the religious to deliberately confuse and obfuscate. He refers to physicist Paul Davies claming the US$ 1 million Templeton Prize for "interdisciplinary Christian research". "If Paul Davies could explain how matter transmogrifies into supernatural phenomena, that would be worth a million dollars", Wallace says.

In the section on "Where is the Money?" Wallace provides more anecdotes and case studies and an annotated list of published financial transactions of the supernatural charities. A priest is an employee under tax law but not an employee under industrial law, which can give rise to quite unfair employment terminations. However all sorts of rorts are available to supernatural employees in terms of tax free fringe benefits that enable the avoidance of income tax.

He rounds out the presentation by detailing the sorry story of paedophile priests and recounting some of the scandalous abuses of the human rights of children that have been perpetrated by the presumed guardians of morality in the Catholic Church. He cites a 1988 paper titled "Moral Reference Points for Tax Reform" in which the church pontificates on the inequities in the distribution of wealth, but is entirely unreflective about the inequities inherent in the wealth of the church itself.

In conclusion Wallace argues that there is an inequitable and discriminatory anomaly in our treatment of religions and that this should be fixed. At the time of the 1936 Tax Act, religions did not run multi-billion dollar businesses. Volunteer work is commendable, but we cannot just assume that all church run activities are charitable. In response, churches claim that their income is equal to their charitable expenses. If so, let them prove it.

It is claimed by some that the problem is too intractable to fix. But church run enterprises are taxed in most other jurisdictions including the USA. Australia is a supernatural tax haven. The time has come to adopt a more rational approach. At the very minimum we need a Charities Commission, as in other comparable countries, to supervise the administration of the accounts of all charities, including supernatural ones.

A flaw in the book is that if it could have done with another round of editing prior to publication. The more pedantic will feel compelled to make margin notes where typographic errors and oversights appear. For most readers, the content will speak for itself and the superficial flaws hopefully will not be distracting.

The book definitely fills a gap. Why will there be many who feel that this is a gap that does not need to be filled? In all matters to do with religion, psychological factors are at play. Resistance to rational persuasion arises because challenges to religion give rise to an uncomfortable cognitive dissonance - a fear that ones cherished beliefs may be false. The common response is denial, aversion or more strenuous efforts to believe, rather than rational thought and reflection.

However "evidence based policies" is the now new mantra, so why not evidence based beliefs? It is a fact that there is no objective evidence that sustains the supernatural truth claims of any religion. This may be an inconvenient fact but the voice of reason needs to be heard.

Generally, if alternative medicines worked, they would not be alternative. If supernatural beings existed, they would be natural. If religions were true, they would not be religions. As ever, morality is best derived from the universal principles of compassion, honesty, freedom and justice.

THE PURPLE ECONOMY by Max Wallace. $40 (+ $3 p&p within Australia)
Mail to ANSA Distributions. PO Box 700, Elsternwick, Vic, 3185

Dr John L Perkins is a Melbourne economist, software developer and freethinker.
He is a founding member of the Secular Party of Australia.

This paper was originally published in D!ssent, No. 27, Spring 2008.