Sunday, August 10, 2008

OUTLINE: Should church property in the Philippines be taxed?


Taxation of church property is not necessary:

A. Present stastusqou already provides taxation and this is if elements of exemption under the Constitution are not present.

Article VI, Section 28(3)):

1. Lands, buildings and improvement;
2. Actually, directly and exclusively used for religious purposes.

A claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception.

B. Jurisprudence proves that exemption from real property tax is not absolute.

1. When they lease their real property to private entities as these are not the actual, direct and exclusive used contemplated by law.. (Lung Center vs. QC, 433 SCRA 119)
2. Church is not exempted from excise taxes. (Lladoc vs. CIR, 14 SCRA 292)
3. organization is automatically exempt without first having to apply and demonstrate that the actual use of the property is within the limited purposes prescribed in the particular exemption statute. The fact that a property is being used for non-profit purposes will not merit an exemption unless the use is one specifically exempted by law. (Maryland)
3. In a 1997 case the Arkansas Court of Appeals said that ownership of the property by a church is not necessary to entitle it to an exemption; use is determinative of entitlement. The property must be used for church purposes. If the property is being used by the owner with a view toward profit it will not be exempt.

C. Loss of revenue is attributed to corruption, trade liberalization where Philippines allows trade in goods and services through elimination of tariffs, tax evasion and over expenditure.

Taxation of church property is not beneficial:

A. It will result to the Impairment of freedom of religion

Rule on freedom of religion:
1. Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance. (Article 18, Universal Declaration of Human Rights) Exemption furthers this provision.

The Philippines adopt the generally accepted principles of international law as part of the law of the land.

2. No law shall be made respecting an establishment of religion or prohibiting the free exercise thereof. (1987 Constitution)

Taxing church property and income would destroy the free exercise of religion that the Bill of Rights seeks to protect. The old principle that the power to tax is the power to destroy is still valid. In regard to taxing door-to-door religious solicitation, the court held in Murdock v. Pennsylvania in 1943:

The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. . . . Those who can tax the exercise of this religious practice can make its exercise so costly as to deprive it of the resources necessary for its maintenance.

The power to tax religious institutions must be construed as the power to limit the free exercise of religion. Levying property taxes upon churches would have the effect of closing the doors of thousands of small congregations that operate on a shoestring. Many downtown churches would be forced out by the property taxes on their valuable land, and their buildings would be replaced by high-rise office complexes.

It will severe the principle of cooperation between church and state. Church gives considerable assistance to the State in the improvement of the morality of the people and the care of the indigent and the handicapped (Essential governmental function). Taxation will make this assistance to the State burdensome due to the impediment of taxes that they otherwise would have to shoulder.

B. It will result to impairment of the separation between church and State.

Reason for not taxing church property is the excessive government entanglement that such taxation would bring. What agency would be responsible for assessing the value of the property, and how would the value be calculated? To what extent will the government require inspection of church property and, in the process, its records? These are but a few areas of church-state entanglement that would come with church property taxes. Of course, with government intervention comes government regulation, which could extend into many aspects of church life. Such entanglement must be viewed as unconstitutional.

By not taxing churches, the government is prevented from directly interfering with how churches operate. By the same token, those churches are also prevented from directly interfering with how the government operates in that they cannot endorse any political candidates, they cannot campaign on behalf of any candidates, and they cannot attack any political candidate. (Murdock v. Pennsylvania)

Taxation of church property is not practical:

A. Not only is exemption from property tax provided by the Real Property Tax code, it is the fundamental law of the land that grants the exemption.

Since taxation is the rule and exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the exemption was granted to private parties based on material consideration of a mutual nature, which then becomes contractual and is thus covered by the non-impairment claim of the Constitution. (Mactan Cebu International Airport vs. Marcos)

B. Since it is unconstitutional, the only way to do it is through revision of the Constitution. Revising the Constitution is not an option.

Our Constitution is a rigid one which can only be done through a difficult process.
The cost of revising the Constitution is very high.

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