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If Churches Paid Taxes

15/04/2014 11:02 BST | Updated 13/06/2014 10:59 BST

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An infographic recently did the social media rounds, boldly claiming that if US churches paid taxes they would fund ALL the food stamps for every person on welfare in America, with enough left over to house the entire homeless population. This prompts a sideways glance to religious institutions in our own fair isle - do British churches carry the same enormous profits as their American compadres or is America's God just that bit richer than ours?

Tax avoidance is this season's sexy topic - Osborne fretted over it in his 2014 Budget and One Direction put their 2012 tax scandal behind them by petitioning against corporate tax avoidance, loudly. But where does this leave churches? They are not classed as businesses and are exempt from paying tax under the Charities Act 2006. Furthermore, as with all charities, they are able to claim back 25% in gift aid from donations.

Tax breaks run the Church of England

The Church of England brings in almost £1billion a year through donations, investments and reserves. Maintenance of their 16,000 plus churches and 42 cathedrals costs an annual sum of around £160 million and they are responsible for 45% of Britain's grade I listed buildings with little help from the government. The church also spends around £189 million on staff and clergy and supports mission agencies and national and international charities, totalling annual outgoings of £1 billion - more than what comes in.

The Church of England also has a £5.5 billion investment portfolio, which has recently come under scrutiny with the Wonga scandal but nonetheless remains completely transparent and within the public eye. The portfolio is managed by the Ethical Investment Advisory Group and, although it is a nice little earner for the church, it is still not as important as charitable donations given by parishioners and the subsequent gift aid received from the government. The Church of England is therefore not a money-making business by any means, it is not even a burger van making a minimal turnover - it makes no profit whatsoever, has reported that 60% of its income comes from gift aid and if the church was forced to pay taxes, it would cease to exist.

Religion means big business in the US

Looking across the great wide blue to the CofE's cousin - the American Catholic Church - we can see a different picture. In the US, the Catholic Church rivals the world's largest corporations. A 2012 report by The Economist estimated annual spending by the Vatican and church-owned entities in the US to be around $170 billion (approx £102 billion) and in total the church employs over 1 million people. The report compares this to General Electric, which in 2010 made $150 billion and Walmart, which employed roughly 2 million people.

The Catholic Church in America is big business but it is also true that it holds massive influence within the charity sector - according to a report by Forbes, Catholic Charities USA has an annual revenue of $4.39 billion and is the fifth largest charitable organisation in the country. An estimated 62% of the money distributed to the poor from church-owned organisations comes from local, state and federal government agencies, not to mention the huge amount of money saved on tax exemptions, yet it is still the largest non-government provider of health-care in the US. It is undeniable that the Catholic Church provides integral support for the underprivileged. What deserves scrutiny however, is how the church is able to take advantage of religious freedom to engage in some 'opaque accounting' and how church leaders are able to benefit considerably from exploitation of religious privileges.

A richer god across the pond

If the Church of England were a taxable business it would be bankrupt. Despite its investment portfolio, its deficit still stands in the millions. By contrast, the amount of profit made by the Catholic Church in the US rivals some of the largest corporations in the world. The exact amount is unknown, largely because the Catholic Church does not disclose its annual figures and there are no sanctions holding it to account. It has the money of a corporation without the imposed financial control and its finances are notoriously messy and impossible to measure accurately - as we have seen several top global publications have attempted to discover the exact amount of the church's wealth and failed.

The amount of money that passes through religious organisations in the US is colossal. Yes, taxing them would bring in huge amounts of money but does this mean it would feed the poor, house the homeless and solve all of the world's problems? Of course not. Tax is not the issue here but transparency. Churches in the US are exempt from disclosing any accounts yet other charitable organisations are not. This is not the case in the UK, which is likely to be another reason why our religious institutions run on a much more open plain.

In a world where money is power, any organisation that makes that much profit - whether it's a church or not - needs to be held accountable somehow. The absence of data, especially in comparison to the Church of England's detailed accounts, poses the question - what is the US Catholic Church hiding? And at what point are world governments going to start holding them to account as they do with every other massive institution?

A big thank you to the accountants at Crunch who helped with the figures.