Has the Italian Catholic Church’s historic get-out of taxes through loopholes played a role in Italy’s economic problems?
Australia’s ABC visited and found the Church massively avoiding property taxes. Not only was there a local ‘offshore,’ tax-free base to funnel funds through — the Vatican City micro-state — but they found properties claiming to be for humble nuns and priests, thus avoiding tax through the loophole, while actually accommodating paying guests.
One estimate puts just this property tax avoidance at €2.2 billion (US $2.9 billion) every year.
But Italian governments have been loathe to pursue lost tax with the Church for obvious reasons. Shortly after the Australian journalist interviewed a minister from the new technocratic government which replaced Berlusconi and asked about the Church, and got evasive answers, a PR minder rang them asking why Australia was even interested in the Church.
What’s possibly worse is that it is suggested that the well-known avoidance of tax by the ‘Papa’ Church has encouraged ordinary Italians to do it too.
Massive tax avoidance is cited as one of the reasons for economic problems in several European countries, particularly Greece and Italy.
Not only that, but Church-run business, such as those in tourism, one of Italy’s biggest earners, have an unfair advantage over other businesses. There are even non-tax paying tourist buses based in the Vatican but running tours around Rome.
Stefano Livadiotti spent 18 months trying to pierce the veil of Vatican secrecy. He listened to the journalist interview Italy’s senior priest, Cardinal Angelo Bagnaso, who denied the Church has been dodging taxes, and responded:
As often happens the President of the Bishop’s Conference isn’t telling the truth. He says there’s no problem with paying tax when there’s a commercial activity, as the law stipulates – but there is a problem, because according to estimates of the councils 95% of the taxes that should be paid by the Church and collected by the councils, are never actually paid.
In its defense, the Church points to its charity work, but the show points out that this is also funded by the state, who have “effectively outsourced its social welfare programs to the Church.”
But for all the Church does for the state, it gets a lot more back. Point eight per cent of all income tax collected goes to charity and ninety per cent of that ends up in the Catholic Church. So even in the midst of this economic crisis, Italian taxpayers are still giving the Church more than a billion Euros a year, more than enough to pay the wages of every priest and Church official in the country. So much for separation of Church and State.
Just after the show was broadcast, Italy’s government did announce that, after European Union pressure, it was closing loopholes.
Mario Staderini, the leader of the Italian Radicals party, said that public outcry had “managed to break down – a little bit – the wall protecting the Church.”
But a government study said that closing the loophole will bring in just €100m — nothing like the independent estimates — and the Church was quick to repeat that number.
What was the simple plea of two ordinary, middle-class, salaried Italians paying full-whack on tax to the ABC? “Give Caesar what belongs to Caesar and God the things that are God’s.”