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Italy Wants To Tax The Catholic Church Amidst Austerity Drive

By: EW News Desk Team Date: 12 December 2011

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12 December 2011

The Catholic Church in Italy could soon be forced to pay property taxes to the government, after intense pressure from Italy’s left wing parties called for the country’s newly reinstated property tax to be extended to commercial properties operated by the Church.

Under long standing laws in Italy, the Catholic Church had been exempted from paying property taxes on any real estate that was not used exclusively for commercial purposes. This included around 50,000 cathedrals, churches and chapels, about 11,000 schools, universities and libraries as well as nearly 5,000 hospitals and clinics.

The church has also long insisted that it did enjoy any exceptional tax privileges, considering how other non-profit and religious entities such as cultural associations, foreign embassies, Lutheran-owned churches and Jewish synagogues had also been exempted from local property taxes.

The Catholic Church, they say, already provides valuable public services while protecting the poorest members of the society.

However, critics believe that the church had exploited a loophole within the system, which allowed them to carry on commercial activities on their properties without being taxed.

Italy’s Radical Party secretary Mario Staderini told the Daily Mail: “Our investigations have shown that some church properties which are deemed as being exempt from taxes are in fact being run as profitable hotels or hostels - the prices they charge are in line with four star hotels.”

The Radical Party, which is vehemently anti-church, has also complained to the European Union, charging that the exemptions given to the church had allowed them an unfair economic advantage over rivals.

If the European Commission rules against Italy, the EU could order the country to demand that the church reimburse the government for the unpaid taxes. This could amount to over 700 million euros ($934 million) a year, said a report by Taxation: News & Information.

Over the weekend, Cardinal Angelo Bagnasco, the head of the Italian bishops' conference, said that the church would be open to looking at the issue and remedying any individual "abuses" that might have occurred.

"The current norms are correct in that they recognize the social value of activities carried out by many non-profits, among them church ones," he said, as quoted by the Associated Press. "It's also correct that if there have been concrete cases in which a tax that should have been paid wasn't, we should verify the abuse and end it."

Just this week, the newspaper of the Italian bishops' conference lashed out at the Italy Radical Party for attempting to "create confusion" with claims of the church’s unpaid taxes. Italian Prime Minister Mario Monti was also subjected to repeated questioning over whether the government would reconsider the tax-exempt status of the church in future austerity measures.

Monti, who is Catholic, said that his cabinet had yet discussed the issue, though on Friday he noted that matter was still before the EU. Cabinet Minister Andrea Riccardi, one of the most prominent lay Catholics in Italy and founder of the Sant'Egidio Community, has claimed though that the church would pay be liable to pay for property taxes if commercial taxes were carried out on the property.

"I think that all the all the religious and cultural activities of the church are a richness for the country and the tax shouldn't be paid," he told RAI state television. But if individual cases are discovered where commercial activity is being carried out, "necessary measures should be taken."