Charities and churches stand to lose billions in tax review

[Des Vize]

Max Wallace of the Australian National Secular Association and author of "The Purple Economy" has sent this piece from "The Australian".  He has been asked to write an opinion piece on it.

 

Charities and churches stand to lose billions in tax review

Adele Ferguson | July 28, 2008 The Australian

CHARITIES and other non-government organisations could lose billions of
dollars' worth of tax perks as the Rudd Government's taxation review
prepares to examine whether the concessions offered to the $80 billion
non-profit sector are justified.

The investigation, by Treasury boss Ken Henry, is expected to meet with
resistance from some of the sector's most powerful groups.

Most of the country's religious groups, which make up about $25 billion of
the sector, run commercial enterprises. Among them is the Seventh Day
Adventists' cereal giant Sanitarium, which generates more than $300 million
a year.

Many of the operations have little to do with charitable work but are
exempt from various taxes including corporate tax and capital gains tax.
The Catholic Church has long opposed reforms such as the creation of a
national charities commission to regulate the sector, or charging tax on
commercial enterprises.

While any changes eventually recommended by Dr Henry may offer the
opportunity to bolster Treasury's coffers, it will create a significant
political challenge for Kevin Rudd, a devout Christian who has courted the
religious vote.

Australian Industry Group head Heather Ridout, a member of the Henry
review's committee, said the non-profit sector was a huge part of the
economy and so it made sense to look at it as part of the review.

"The agenda is broad and so all types of entities will be looked at in this
review," she said. "The non-profit sector is a very big and important part
of this, particularly since we have had a lot of changes in welfare
benefits and their interface with tax."

Business enterprises run by religious groups range from pizza chains,
insurance companies, wineries, farms, schools, hospitals and aged-care
facilities. All are exempt from tax. Australia is one of the few countries
in the world where religious groups are not forced to pay tax on business
ventures.

In the past few years, sports stars such as cricketers Shane Warne and
Ricky Ponting and Formula One driver Mark Webber have set up charities to
raisemoney under their own names. They receive various tax deductions.

The sector accounts for 8 per cent of GDP and employs more than 600,000
people, but a lack of transparency and poor accounting standards and
corporate governance in the financial arrangements of many organisations
has long been a concern.

In an era of heavy corporate regulation, most parts of the non-profit
sector remain unregulated.

There is no process for the registration of charities, no consistent
collection of information about the activities or funding sources of
charities and there is little or no monitoring of the activities of
charities.

This means that the Australian Government has no way of knowing how big the
sector is, or how much Treasury forgoes in tax each year.

The tax review, and a simultaneous inquiry into the accountability and
transparency in its use of public and government funds in the sector, by
the Senate standing committee on economics, will now put these activities
under the spotlight.

The Senate inquiry is currently accepting submissions into the disclosure
regime for charities and not-for-profit organisations. Submissions close on
August 29 with a report to be released in November.

World Vision head Tim Costello described the non-profit sector as in dire
need of reform. "We don't have a single regulatory system or uniform
accounting standards and so it makes it confusing for the public to know
who to trust, or who is efficient," he said. "There are 700,000
not-for-profit organisations and the latest fad today is under-30s wanting
to start their own not-for-profit equivalent of what in my day was starting
a rock band.

"There are also a lot of celebrities and sports stars setting up charities
in their own name or naming it after their child. These have a lot of
overheads and it isn't fair on the ATO to have to regulate this.

"I would much prefer the Warren Buffett way, who decided to put his money
in with Bill Gates. To me that is much more impressive than someone having
their own name on a charity."

He also said with the growing number of charities raising money for similar
things, it was becoming confusing to the public and there was a risk of
"passion fatigue", particularly as petrol prices hit record highs and the
economy gets tough.

Peter Shergold, the former secretary of the Department of the Prime
Minister and Cabinet, who recently set up the new Centre for Social Impact
at the University of NSW with initial funding of $12.5 million from the
federal Government to educate the non-profit sector, said he welcomed any
review. "There needs to be a review of the sector because it lacks
transparency and the accounting standards need to be streamlined," he said.

"There are 700,000 organisations in the non-profit sector. It is too many.
You have 2000 charities that have at least one of their goals tackling
breast cancer. This is inefficient and so I think the idea of a charities
commission should be explored.

"I feel positive about a standard regulatory regime."

Dr Shergold said some organisations received a lot of money from
governments in the form of grants and subsidies and yet there was a lack of
transparency.

"We need to look at taxation for charities - who does and doesn't get the
gift recipient status," he said.





--
Des Vize

www.the-brights.net
THE BRIGHTS: ILLUMINATING AND ELEVATING THE NATURALISTIC WORLDVIEW.
(A bright is a person who has a naturalistic worldview, free of supernatural and mystical elements.)

[Des]

Render unto Caesar
| August 08, 2008From: The Australian

THE Treasury review of tax concessions offered to the $80billion non-
profit sector marks a policy turning point that has been a long time
coming. One of the most contentious concessions has been the tax-
exempt status of commercial businesses run by religious organisations.
This privilege is not conceded in many other comparable liberal
democracies.
The questioning of this privilege has occurred sporadically in the
past century. In 1905 the Catholic Church was running a commercial
laundry at its convent in Sandy Bay, Hobart, an Australian Magdalene
laundry. The local council argued that if it was running a business
from this site, it should not be exempt from local council rates. The
council's attempt to withdraw this privilege failed.
In 1930, Anne Lennon railed against the tax privileges of the churches
on her soapbox in the Sydney Domain behind the NSW Parliament House.
She was arrested, as the free speech laws we enjoy now were not so
liberal then. The Rationalist Association of Australia appealed her
case and lost.
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