In his forthcoming book, Australian Humanist Max Wallace defines the Purple Economy as "the wealth generated by the eternal mass-exemption from taxation of religious organizations, their subsidiaries and their charitable arms." Here he writes about the theft by the Churches of millions of tax dollars from taxpayers who may have no intention of supporting the Church!

A Symptom of the Problem

The absence of much literature on this subject speaks to the historical and contemporary political influence of the churches on governments. Worldwide there are few governments that have separated church and state. In Europe in particular there are several states that still have monarchies and no formal separation.

What has not been recognized is how the churches siphon off up to ten per cent of taxpayers' incomes over our lifetimes into their accounts irrespective of whether the taxpayers are members of the churches or not. They do this both directly in those countries that have 'church taxes' and indirectly through tax exemptions and a myriad of tax privileges awarded to churches by governments by way of legislation. Fortunately, legal cases undertaken by German atheists have helped to highlight these important facts.

Recently, the German government has had to grudgingly concede that it was inappropriate that between eight and nine per cent of atheists' incomes was garnisheed from their incomes and given to churches. The situation now is that citizens can write to the government telling them they no longer belong to a church which ends the direct deduction of the sum from their taxes. As a consequence Germans have been deserting their churches in droves.

The reason the German government had this policy was that on 20 July 1933 a Concordat was signed between the Catholic Church of Pope Pius XI and Adolf Hitler's government. The Concordat revived, formalized and fortunately made transparent the tax arrangement between the German state and the Church. At the time Hitler was seeking credibility in diplomatic terms to cover for his worsening reputation in the wake of his criminal political tactics.

The pope had no problem with this. It came a few years after the 1929 Concordat with Mussolini that was the basis for the church's contemporary wealth in terms of property ceded to the Vatican and the granting of tax exemptions.

Staggeringly Rich

What applies in Europe also applies world wide. In the United States, despite formal separation of church and state, churches were awarded tax privileges in the 19th century without adequate reporting requirements that have seen even the minor faiths become staggeringly rich. For example, in 1996 Time magazine ran a cover story on the Church of the Latter-Day Saints (Mormons) which estimated their wealth at that time at US$30 billion. Around the same time another estimate determined that the minority Assemblies of God was worth US$15.6 billion. What is particularly galling about the effects of these privileges now is that fundamentalist churches in the US are openly involved in political advocacy without seemingly breaching legislation which requires that their organizations do not have political purposes.

In Japan, there are many thousands of cults and minority religions linking into tax exemptions. The phenomenon is so widespread that it provoked a comedy film The Taxing Woman, with the storyline of an enthusiastic female tax officer pursuing a bogus religious organization seeking to protect criminal profits through exemptions. But it was no laughing matter for the Japanese when the tax-exempt Aum Supreme Truth capitalized on the benefits to help subsidize their attempt at mass murder with the 1995 sarin gas attack in the Tokyo underground. Elsewhere in Asia, for example, Thailand in particular, similar exemptions and lack of accountability encourage corrupt Buddhist fraud against the state.

Just why similar patterns of tax privilege play out across the world irrespective of the continent and the religious traditions involved is an untold story.

Show us the Money

Just why those of us in liberal democracies who have no religious affiliations should pay for organizations that we fundamentally disagree with is a question that needs an answer. To go back to the start, the answer is clearly linked to the lack of formal separation of church and state. Separation of church and state is the defining characteristic of democracy. But even in the case of France, the Catholic Church still retains an exemption from taxation despite the 1905 legislation formalizing separation.

The reason often given for these privileges is that religious organizations are involved in charitable works so the tax privileges are a form of 'cross-subsidization'. To that I say "prove it". Firstly, let us see the incomes and expenditures of all these charities if we decide to allow our taxes to support them. As publicly supported organizations there should be total accountability. Secondly, I may have no sympathy with the aims of some of these charities or the religious organizations running them. Given that is so, as the Italian Government has recognized, I should be able to redirect a proportion of my taxes to the organizations I support.

The reality is that churches have been and are taking approximately ten per cent of our incomes through direct and indirect tax privileges over our lifetimes creating immense, self-perpetuating wealth for themselves. The personal opportunity cost to individual citizens is considerable. This is a best kept secret obscured by tradition, political patronage and the complexity of tax law that has blindsided critics for over a hundred years at least. The Catholic Church which refuses the distinction between church and state has been the major beneficiary of this cover-up.

Irish demand for Audit of Church Assets

In a ground-breaking speech in the Irish Senate in November 2005 following the Ferns Inquiry which detailed yet more appalling case studies of sexual abuse of children and attempts to deceive authorities about them, parliamentarian Liz O'Donnell said that compensation payments should be informed by the facts about the Catholic Church's wealth in Ireland. She said the state "must audit the Church's wealth". It should be obliged to "open up its books. Discovery orders should be made to gain some understanding of the money trail. Such an audit of Church assets and wealth is long overdue..."

This is the first time a politician anywhere has said what has needed to be said. Action is required by governments to assess church wealth, reconsider their tax and property privileges and establish separation of church and state appropriate to the 21st century.

Churches believe they can avoid death, but they know they can avoid tax. It is time to end their eternal, unaccountable, tax-free life in the name of equality and democracy.

Max Wallace is Director of the Australian National Secular Association