When the Church-dominated Constitutional Commission opted to exempt religious organizations from the payment of taxes, the framers completely ignored that in exchange for that privilege is their duty to uplift the moral and spiritual life of our people. This is implicit in Section 5, Article III of the Bill of Rights. Instead of attending to its basic obligation, it focused on the benefit the Church will derive as stated in Section 28 (3), Article VI of the 1987 Constitution, to quote: “Charitable institutions, churches and personages or convents appurtenant thereto, mosque and 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.”
Worth noting is when the Constitution exempted the Church properties from tax, that sent a foreboding warning that the Filipino people will not be having a democratic, but a clerico-elitist government. Specifically, the Roman Catholic Church, and their minions thought that resurrecting that ancient feudalistic practice would mark the spiritual revival of the nation which they blamed to have degenerated during the Marcos era.
Not one of those commissioners entertained the idea that exempting the Church and its properties would equally apply to all other religious organizations. They never anticipated that it would work against them in terms of collection competition, much that others have perfected the art of tithing and discipline that in less than four decades since the application of that provision saw the spouting of various religions with many of their leaders acting like self-styled political brokers, living like modern-day maharajahs wallowing in fabulous luxury no different from the ancient emperors.
The net result is the revival of a theocratic government. The Catholic Church concentrated on the nasty habit of interfering in governmental affairs by asking so many favors. Nonetheless, tax exemption has allowed them to finance their evangelical activities. This in turn accelerated their recruitment. For that same period, many religious organizations were able to build palatial houses for their spiritual leaders, establish their own schools, universities, hospitals, own television channels and radio stations, and operate cooperatives and charitable organizations for their members.
The Church operates so many educational institutions where students mostly from the upper class of society are enrolled. They represent the biggest and most lucrative of all their businesses. Educational institutions are not only exempt from the payment of income tax, but also from the payment of real estate tax. The Church has vast landholdings classified as seminaries, convents, retreat houses, retirement houses for the retired members of the Church, orphanages, hospitals, charitable houses and cemeteries. They have numerous non-stock and non-profit corporations which are also tax-free. However, this exemption equally applies to other religious organizations under the principle of equal protection clause.
The crux however is that Catholic Church is now reeling the pinch of diminished followers and contributions. The Church has increasingly become dependent on the oligarchs and the elite for contributions. This kind of symbiotic relationship cemented the alliance between the Church and the oligarchy, viz. against any government that will attempt to bring about reforms in our society.
For instance, allowing the super rich to have a building named in his honor inside a church-operated university visible to the public has become ludicrous, for it seems the building stands alongside with the building honoring the patron saint of the church order. One university noted for its open political bias against the government even accorded an honorary doctorate degree “honoris causa” degrees to tycoons in exchange for their donations which everybody knows is being used to deduct payment of tax which donation is equally tax exempt from the donor’s tax.
The practice of exempting religious organizations from the payment of tax on their landholding and properties other than those directly, actually and exclusively used for their spiritual service has been utilized by some religious cults, demagogues and charlatans with some even boasting of brokering candidates for public office. Even if they would not solicit donations, nonetheless most candidates donate to make sure the church will support their bid. Some even run for public office themselves using their followers in whose loyalty is only to them, and not to the government. We see some of them in Congress often styling themselves as more knowledgeable to their peers.
Generally, there are several taxes that the Church and other religious organizations are exempt from. First is individual income tax. Priests, nuns, ministers, imams, rabbis are exempt for reasons that they do not receive salary for their vocation. Only allowance is given them although many enjoy their basic needs well above that enjoyed of ordinary wage earners.
Second, since all corporations owned by the religious organizations are placed under the category of non-stock and non-profit corporations, automatically they are exempted from the payment of income tax.
Third, even if many of their properties are not used directly, actually and exclusively used for their religious rites, they can still avail of tax exemption by converting them to foundations or charitable institutions, provided under Section 30 (E) of the National Internal Revenue Code, to quote: “Non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person.”
Fourth, they are also exempted from the payment of excise tax on imported educational materials such as books and scientific instruments for their educational institutions.
Fifth, donations to religious organizations and charitable institutions are exempt from donor’s tax. This is a double whammy to the donor because on top of this privilege of exemption, they can use the amount donated as tax deductible. In effect, both the giver and receiver under this situation are able to get away with the payment of tax.
Some suggest that non-taxable gains should not be allowed to purchase government bonds and Treasury bills. If ever non-taxable income is invested, it should be first required to pay tax before being allowed to purchase said bonds and Treasury bills. Otherwise, the government would be paying them interest for their investment which they did not pay the corresponding tax. For instance, part of the commission earned by those who worked to secure the approval of the controversial Peace Bond Code-NGO was used to purchase stocks from the now privatized Lopez-owned EDC.
Sixth, the church should be prohibited from funneling their income to create people’s organizations. This is pursuant to Section 15, Article XIII of the Constitution or on the role and rights of people’s organizations. People’s organization or NGOs are tax exempt.
Seventh, non-profit and non-stock corporations or NGOs have been used to stash public funds appropriated for public use. The NGOs created by Janet Napoles were used to funnel developmental projects to members of Congress. Note that NGOs can avail of tax exemption if engaged in charitable and welfare assistance program, but not when acting as broker or facilitator for the release of public funds.
Worse, many of these NGOs are being used as fronts by foreign intelligence agencies to subvert the government and often they are affiliated with the Church. In effect, people operating these NGOs are engaged in subversion.