I.

Position Paper

Tax Imposition on Religious Organizations

Religion is a belief or a cultural system that includes worldviews, texts, prophecies,

revelations, and morals that have spiritual meaning to members of a particular faith and can play
an important role in an individual's life and experiences, including the development of healthy
habits, the regulation of behaviors, and the understanding of one's emotions (Stibich, 2022). Many
people want to be religious because they perceive it as part of their development, and they want
to practice their faith to feed their hungry soul. According to Asia Society, 86% of Filipinos are
Roman Catholic, 6% are members of various nationalized Christian cults, and 2% are members of
more than 100 Protestant denominations. For a long time, these religious groups have been
excluded from paying property taxes and income taxes under Article IV, Section 28 of the
Philippine Constitution. Many individuals currently believe that churches should pay taxes because
they function similarly to other organizations, and that the government should treat believers and
non-believers equally. Taxation is not a new topic in religion. Long ago, Jesus was confronted with
the challenging question of whether Jews should or should not pay taxes to Roman rulers. The
renewed discussion over whether religious institutions should be tax-exempt began during the
administration of then-President Rodrigo Duterte. Many religious organizations could be
proclaiming that they are religious institutions solely for the benefit of tax exemptions such as
property taxes, thus it is finally time for them to start paying to the community and the state for
the resources they use.

According to Roque (2018), a lawyer, removing churches' tax exemption is unlikely to

significantly improve BIR collections because the majority of their receipts come from gifts made
by their members, which are exempt from donor's tax under the Tax Code. Furthermore, the tax
exemption granted to religious groups under Section 30 of the Tax Code does not apply to money
derived from for-profit activities, regardless of where the proceeds are spent (National Internal
Revenue Code of 1997). In contrast, these arguments do not limit whether religious organizations
should be taxed or not, because there are other significant reasons why they should be charged.

One reason religious institution should be taxed is that individuals and organizations
indirectly bear the financial burden of their omitted tax. The freedom to practice one's religion
does not always imply tax exemption (Anderson, 2019), as this might cause a slew of issues in the
country. People must pay for the taxes that religious organizations do not pay, distributing the
financial burden to others who do not enjoy the same benefit. Furthermore, the church and other
religious institutions are examples of beneficiaries of government services; thus, whether they
opt to make use of the services or not, they are still receiving the same protection as the rest of
the population and enjoy the same peace in society brought about by the government's existence
and effective implementation of laws. Those who utilize the resources of the nation have to
contribute even if the figures aren't the same for everyone, but they do reflect the concept of
equality among those who use government services. According to Rufo (2015), the Roman
Catholic Archdiocese of Manila (RCAM) is flush with cash, having invested in bonds, foreign
currency deposits, and stock investments, and has remained one of the wealthiest Catholic
dioceses in the world as of 2015. Dioceses are intended to be registered with the Securities and
Exchange Commission in order to obtain legal personality, but the majority of them are not and
are in violation with reportorial obligations such as the issuance of Financial Statements.
According to Rappler (2015), a retired archbishop stated that anyone who wants to bring up any
issue about how Church assets are managed is considered to be "questioning the bishop's
authority." As a result, because these institutions are built on submission and servitude no one
would dare to question them. The Archdiocese of Nueva Segovia de Vigan, however, is an
exception in the lack of transparency on Church financial matters, as stated in their financial
statements as of 2013, that it has a total asset of Php43.6 million, of which Php31 million is in the
form of investments, Php10.8 million from rental income, Php10.3 million operational expenses,
and Php5.9 million cash on hand and in the bank (Rufo, 2015). Keeping this in mind, we can see
how wealthy some churches are and how they operate just like any other business, and if they
were to pay taxes, it would have been a huge assistance in funding the initiatives that the
government needs for the country’s development.

Another reason churches should be taxed is that the non-profit status of churches is
currently and is still going to be exploited. When a particular sector is given too much freedom or
influence, things may rapidly get out of control. It is also worth noting that most tax regulations,
if they make any distinction at all, do not establish clear distinctions between true and false faiths.
There are no major examinations into the religion to establish if it meets the standards of a "valid"
religion. This is due to the fact that it is fundamentally linked to our basic right to practice our
own religions, resulting in this type of study difficult to carry out. Naturally, more corrupt persons
strive to exploit such inadequacies in order to promote fraudulent activities and tax evasion.
Scandal surrounds institutions that burden members for their membership or require a
percentage of members' income as exchange for religion. According to the New York Times, in
2019, three Filipino church leaders of the Philippines-based megachurch the Kingdom of Jesus
Christ founded by Apollo Quiboloy, namely, Guia Cabactulan, Marissa Duenas, and Amanda
Estopare, were arrested in Los Angeles and Hawaii by federal agents for bringing church members
to the United States under fraudulent pretenses, telling them that they were given the opportunity
to be special guests at a concert supporting the church's ministry but their passports were
immediately taken away by these three church leaders, who then enforced them to collect
donations to help needy children in the Philippines. From 2014 to mid-2019, the Kingdom of Jesus
Christ raised about $20 million, but the majority of the money went back into the church's finances
and to pay for luxury items for church leaders such as a Bentley, a bulletproof Cadillac Escalade,
and an Armani Suit, as well as real estate and a mansion in Calabasas, California. These workers
were not paid and had to fulfill strict fund-raising quotas; if they did not, they faced consequences
such as being compelled to spend three to five days in isolation in an enclosed area of the
Kingdom of Jesus Christ compound, being denied food, and listening to prerecorded preaching
by church leaders (Vigdor, 2020). Religious institutions abusing their authority is unfortunately not
an entirely novel occurrence in society, and was once one of the most fundamental reason why
the public thought there needed to be a distinction of church and state. The concept of a god
frequently indicates that the supreme being is all-powerful and without flaws. However, these
religions are commandeered by mere humans who are susceptible to errors and avarice, so
allowing them to have excessive authority would be an unwise decision.

I am convinced that levying taxes on churches is not just as bad as it appears at first glance.
However, I must emphasize that taxing churches and taxing charity organizations are not the exact
same thing, as taxes for churches can be imposed in such a way that charitable institutions' correct
tax exemption can be reasonable. To tax a church is merely to require those aspects of the church
institution that are legally obligated to pay taxes to the government and offset those actual
charitable contributions that they give out for citizens. Religious instruction or worship are not the
responsibility of the government. A church or religious institution exists not just to provide
individuals with reasonable advantages for which the state is responsible. This is the whole
purpose of religious freedom; it is one's decision, and it is not the role of the government to
impose one on you. As a result, the government, and thus the taxpayer, should not be required
to pay for it. Churches serve a useful role in that they give a location for religious worship as well
as direction through the provision of religious instruction. However, I want to highlight that such
religious instruction is simply not the government's role. It is quite appropriate for a church to
function in order to provide such instruction or worship, but they must do so on equal terms as
any other institution.