WHY PENTECOSTAL CHURCHES SHOULD PAY TAXES.

WHY PENTECOSTAL CHURCHES SHOULD PAY TAXES.

This is not to suggest that you abandon your church or your faith. Am a Christian and an Economist by profession. For one thing, any religious organization that lives up to its commitments to its congregation and community would have nothing to fear from filing a tax return and should clearly start its expenditure patterns which should be inline with the objectives on its certificate of incorporation, After that, it should then be exempted from paying taxes just like every other non-profit. For another, we need to determine if Pentecostals in Uganda are qualified to maintain their status quo as tax exempt organizations considering their vast financial resources. In Uganda’s corporate Income Tax Act establishes a category of exempt organizations. Tax exempt organizations include charitable, educational and religious institutions of a public character (1st schedule of Income Tax Act, Cap. 340). Therefore, Pentecostals being a religious institution is exempted from income tax in Uganda, Pentecostals are exempted from corporation tax because they are regarded as organization of a public character (Bahemuka, 2006) and a non-profit organization (Non-Governmental Organization Registration Act). But of recent am asking my self why Pentecostals should maintain tax exempt status because they are perceived to be business oriented organizations they advertise, price  special service programs, profit oriented which all qualifies them as businesses.

Pentecostals emerged from the church and the movement is connected with a group of Christians that emphasize the gifts of the Holy Spirit. The free dictionary by Farlex described Pentecostals as “any fundamentalist protestant church that uses revivalist method to achieve experiences comparable to the Pentecostal experience of the first Christian disciples”. The Pentecostals in Uganda are registered under Section 1(d) of the Non-Governmental Organizations (NGOs) Registration Act of 1989, amended 2006.so with that background, the law deems them “Tax Exempt”

It will be obvious to rational people that exempting religious organizations from paying any taxes is a clear case of government "respecting an establishment of religion." But throughout history we have seen many otherwise-lucid thinkers insist otherwise, including Supreme Court justices who uphold biblical views when their taxpayer-funded jobs explicitly require them to uphold the Constitution. Because religious organizations are not accountable to the citizens who subsidize them. If churches engage in charitable work that benefits the community, do all citizens have an interest in supporting such endeavors with various tax exemptions? This is the sound basis for tax exemptions for non-profit organizations, whose activities and finances are subject to audit and public scrutiny. In the case of religious organizations, however, the books are closed. A certain new paper publication in Uganda ran an Article explaining and exposing how the different kampala churches run un Audited  books of accounts, my question is who is responsible for this money and how is it spent? Church groups receiving tax exemptions must annually file a detailed 360 statement itemizing where the money has gone.

What if churches do not engage in charitable work? Or do so far less efficiently, effectively - or charitably – than the Amount of Money (Income) that they made? Religious organizations can and do take great advantage of their tax-free status. Many amass great wealth and vast media empires and buildings - all of it off the tax rolls largely contributing to income inequalities. The point is that religious organizations can and do espouse doctrines of intolerance and hatred, filter funds to foreign enemies ( countries). They are nevertheless tax-exempt, their finances never scrutinized, because they qualify as "religious organizations." Tax-exempt status is a privilege - not a right - and churches should be held to the same standards as other non-profits - if not higher standards.

  

A case study of a  Pentecostal  church in town, in the last month, it made 1, 0004, 000 Us dollars on what they called MMO (“My miracle offering”) and they claimed that their motive was to spend it in Israel, Southern Sudan among other countries, that’s fine a good motive but how much of it will be spent otherwise and go un taxed, on top of that, its economically irrational to see that money is collected in Uganda and being spent or taken outside the country that’s already a leakage and its contributing to our own capital outflow?. In the year 2008, the commissioner for Domestic taxes in his speech while in a conference suggested that religious organizations should have clearly audited books, filled returns and their surplus be taxed, this raised many criticisms but thinking the other way round not the obvious, he had a point, The Revenue collection in the financial year 2011/12 fell short by around 7 billion Uganda shillings and this may be partly because the taxable base is small, if we are to fill that difference we have to expand the base and the church would be such a good rescue, Any Money that Is not spent as per their motive be taxed and assets contribute to property tax.

Because it is easily and routinely abused( The tax Exemption). Consider the proliferation of phony churches as a tax dodge. An IRS attorney cites a brothel "church," where sisterly love is offered to male parishioners in exchange for donations. In Hardenburgh, New York several years ago, 235 of the 239 property owners in that town were granted religious tax exemption because the properties of the owners were made branches of the mail-order "Universal Life Church." In Wisconsin, hotels pay parking lots, farms, and communion wafer bakeries are among the church holdings that are tax exempt. Overall, at least $4.2 billion in tax-exempt religious property now exists in that state alone. It's a racket, and it costs taxpayers even more money to monitor, uncover and fight the abuse it invites - none of which would be necessary if such unenforceable loopholes in our tax code never existed. Many Pastor Drive “High End” cars, have powerful houses and dress in imported suits, make frequent first class travels and more than 70% of their congregation are starving and on Foot, what’s Godly in that, Jesus him self was humiliated so that Man can be raised and  that that’s the man we(the pastors) claim to be following. Lets practice what we preach but not the famous coward saying that “do what I say but not as I do”

It costs you and me billions of shillings. Consider that for every tax dollar/shilling a religious organization does not pay, you and I pay it on its behalf either directly or indirectly and on top of that its us that contribute to the dollars they made, you observe a double loss in this scenario. Many are among the wealthiest organizations in the world: by 1971, the amount of real and personal property owned by U.S. churches was approx. $110 billion. In New York City alone, the amount was $3 billion in 1989. A 1986 estimate showed religious income in that year of approx. $100 billion, or about five times the income of the five largest corporations in the U.S.  All tax free. Ask your self these questions, should the taxes of non-religious citizens be higher to subsidize every church, synagogue, and mosque in town? Should working women pay taxes to subsidize clergy and other employees' paychecks, when such positions are overwhelmingly - and legally - restricted to men? Because it makes no sense to deny that tax exemption is a meaningful public subsidy is to put forth an absurd proposition: just consider what your personal financial picture would look like if you never paid any taxes. Yet it is exactly this type of ludicrous logic on which religious tax exemptions have been upheld time and again by our courts.

In conclusion, Non-taxation of Pentecostals is regarded as tax inequality between Pentecostals and business organizations in the country taxation of Pentecostals would increase government income and also reduce the tax burden of other non-tax exempt organizations in the country.

Am suggesting that URA should provide legislation that would make Pentecostals operate in an environment of increasing regulation and scrutiny. This will check the unethical conducts of Pentecostal pastors. Alternatively Pentecostals should be registered and governed under the Trustee Incorporated Act. The trustees should be people of impeccable character other than the pastors. According to the Act, the trustees are responsible for the properties that come into their hands and are answerable and accountable for their own acts, receipts, neglects and defaults. This will impose strict regime of accountability and protect the activity and integrity of Pentecostals in the country. The current scheme is unfair and unnecessary. Pentecostal Churches can and should pay taxes just like everybody else.

For God and My Country.

Andrew Kyambadde M.

Monetary Economist.