A Critical Affair: Taxing the Catholic Church

Removing charity tax exemptions from churches is likely easier said than done

St Henry's Church, Twin Butte, Alberta. (Flickr/ WherezJeff)

St Henry’s Church, Twin Butte, Alberta. (Flickr/ WherezJeff)

In Canada, many religious organizations and churches are considered to be registered charities, giving them an exemption from paying certain taxes and other financial obligations. For an organization to be categorized as a charity, it must serve a government-approved charitable purpose. These include the relief of poverty, advancement of religion, advancement of education, or other purposes that benefit a community.

According to a report published by the Centre for Inquiry Canada, an organization that promotes secular decision-making, there are over 32,000 religious charities registered in the country, and approximately 80 per cent of them are Christian.

The question of whether or not the country should remove the tax exemption for the Catholic Church has started to gain traction as people call for reparations for the residential school system and supporting Indigenous peoples. The Catholic Church has drawn focus because of its involvement in running the institutions, meaning the organization was complicit — along with the Canadian government — in perpetuating the colonist-driven genocide against Indigenous peoples, which resulted in lasting intergenerational trauma and solidified systemic oppression.

Of the 82 residential schools built and operated across the country, 67 were of Roman Catholic denomination. The remainder were Baptist, Anglican, Methodist, Presbyterian, United Church, non-denominational, or government-run.

However, despite the increased calls for collecting taxes from churches, few people are seriously talking about the practical steps that would need to be taken for that to actually happen.

One of the issues with removing the tax-exempt status from the Catholic Church is that there is no single unified entity that the Canadian Revenue Agency could begin taxing. 

The Catholic Church, as we commonly think of it, consists of several thousand individual churches that operate within a complicated Latin hierarchical structure divided geographically into four episcopal assemblies, 18 archdioceses, and 41 dioceses, mostly overseen by the Canadian Conference of Catholic Bishops

In addition, there’s the Apostolic Nunciature in Canada, which serves as a diplomatic mission from the Holy See in the Vatican, and the Military Ordinariate of Canada, which is a “pseudo-diocese” that provides Catholic services to the military.

Ontario, Saskatchewan, and Alberta also have Catholic school systems with their own separate governing structures, and there are numerous independent Catholic schools across the country that belong to groups like the Canadian Catholic School Trustees’ Association. Many of these schools are supported by funding collected through taxation. So in a way, organizations that we think of as being controlled by the Catholic Church both qualify for tax exemptions while also receiving tax funding from provinces.

To adjust or remove the tax exemption benefits from Catholic organizations, the main approach that’s being considered is to remove property tax exemptions from individual churches. This method was recently proposed by the mayor of Iqaluit, Kenny Bell.

On a national scale, however, this could prove difficult. One possible reason the federal government is avoiding taking these steps may be because they anticipate legal challenges based on charter rights protecting people from religious-based discrimination. By singling one religion out of many for the purpose of taxation, the government could be violating these rights, which means that removing the tax exemption based on the advancement of religion would be an all-or-nothing deal that would have to affect many other religious charities in the country, Catholic or not.

The CFIC has an interesting response to this, bringing up the point that the charter should also protect Canadians’ right to freedom from religion, which is ignored when your tax money is being spent on Catholic schools and property subsidies without your consent. 

They suggest that if the “advancement of religion” charitable purpose was removed, a number of churches would be eligible to operate as non-profits, some of which pay a certain amount of property income tax.

It’s speculative whether these additional taxes could create financial burdens for churches across the country, impacting the social safety nets provided by church-run shelters, food banks, kitchens, and youth programs that low-income and marginalized community members rely on. Whether or not the Vatican could or would financially support them after that is anyone’s guess.

Though these services could be provided solely by secular charities, non-profits, or government entities, at the moment that’s not the case. The one thing for certain is that creating an effective policy to tax the Catholic Church in Canada would be an unprecedented and complex legislative undertaking, with the potential to cause more harm than good if it wasn’t handled carefully.