Why are churches a tax tree zone?
We start from the principle that owners of property should be expected to pay taxes to their local government. In part the taxes are charged to fund municipal services, regardless whether those services are provided or consumed. Individual home owners pay taxes, as do business owners. Charitable organization and non-profits pay taxes at a reduced rate, presumably on the rationale that they are providing services which are needed by citizens. Churches do not pay municipal taxes. Why is this? After all, they consume municipal services. Were individuals or business on the same footprint of land, they would pay taxes. So churches have special status.
There may be a partial answer in history. Churches have been exempt from at least some forms of taxation for, quite literally, millennia. An exemption for religion is mentioned in the Book of Genesis. In converting to Christianity, the Emperor Constantine transferred tax exemptions from the old Roman temples to Christian churches. Since then, most churches have been tax exempt, with some well-known exceptions (such as the confiscation of church property by Henry VIII). Centuries ago, churches were almost a form of government in themselves. They had their own judicial system, and a form of taxation as well (tithing and absolutions). They provided community services (marriages, funerals, sanctuary, education, sometimes charity). They have been known to field, or at least hire, armies. And, of course, clergy were often part of the civil government, sitting on municipal councils and in the House of Lords. Centuries ago, and as recently as decades ago, almost the whole of a community was a member of one church or another. Tax exemption for churches need not have been considered as an exemption for a specific group, but an exemption for all (or almost all) members of the community.
Where churches were taxed, the practice could be seen as an attempt by the state to control or limit a religion. And where some religions were taxed and others not, the state could fairly be seen as favouring one religious practice over another. The avoidance of favouritism can be seen as the objective behind the First Amendment to the Constitution of the United States. Many early colonists were fleeing religious persecution and favouritism, hence a strong desire to avoid any government support for one religious sect or another.
This view of history sees the exemption of churches from taxation as having two roots: support for the state religion (or that held by most citizens); and the avoidance of favouritism among religions. The vast majority of citizens of the United Kingdom, France, the United States and Canada held religious beliefs and attended church. Churches were property of the community.
Decades ago, most Canadians attended church, more or less regularly. Today, more than 75% of Canadians do not attend church. Churches are not representative of the Canadian community. As well, their former roles have changed; they are not involved in civil governance, their community services (marriage, education etc.) can be obtained from the civil authority, their expression and adherence is protected by the Charter of Rights.
The reasons for granting churches tax exemptions no longer exist. In granting such exemptions, we are depriving government of potential revenues, thereby limiting the scope of government to spend or reduce taxes. Some might argue that churches deserve special tax treatment for the community services they do provide. Such would be reasonable, if applied at the rates paid and for the allowable activities undertaken by non-religious charitable organizations.
The consequences of taxing churches would probably not be good for the churches. More would close. Some community services would perhaps cease, although there would always be the opportunity to establish a charitable organization providing such services. Former church property would then be used for other purposes, perhaps ones which generate municipal taxes, which could fund replacement community services.
Some might view the imposition of taxes as an attack on religion. This discussion takes the view that taxation of churches removes the favouritism towards churches over other charitable endeavours. Like other non-religious charitable organizations, donations to churches could still continue to be tax deductible. State support remains, just not at the unique level of the past.