Property tax exemptions for places of worship in British Columbia
The BC Humanist Association released a report today calling on municipalities to adopt regular benefits tests for tax exemptions granted to places of worship. These tests, the report states, are necessary to ensure potential recipients of tax exemptions — which total millions each year — provide services that benefit the community as a whole.
This measure would provide much needed safeguards to prevent tax funds from supporting organizations that operate as private clubs, discriminate against protected groups, operate commercial enterprises, or break the laws, such as COVID-19 regulations.
Two types of tax exemptions can apply to places of worship in BC: statutory tax exemptions that are granted automatically by the provincial government, and permissive tax exemptions that can be granted by municipal governments.
Tax exemptions can be positive tools for governments to support the work of groups that provide beneficial services to the public. However, they require municipal governments to increase taxes elsewhere to cover funds that would otherwise be collected. As a result, the report states that there are a number of important steps that municipal governments should take to ensure these exemptions are fair, transparent, and in the best interest of the public.
The report reveals the value of tax exemptions to places of worship in BC is considerable. In 2019, as much as $45.9 million in potential tax revenue was not accessed by municipalities as a result of statutory tax exemptions, and an additional $12.5 million was granted in permissive tax exemptions. This totals $58.4 million in tax exemptions for 2019, roughly $12 per British Columbian.
The report analyzes examples of places of worship that received generous tax exemptions despite operating commercial enterprises, secluding themselves from society, catering almost exclusively to members, or discriminating against protected groups.
Places of worship that openly flaunted COVID-19 regulations prohibiting gatherings also received tax exemptions. These tax exemptions, both statutory and permissive, exceed the fines levied against these places of worship for violating regulations put in place to protect people during the pandemic.
In light of this, the report recommends that:
1) Automatic statutory tax exemptions should be abolished. Because they are applied automatically, there is little oversight of statutory exemptions. These exemptions shrink municipal tax bases, and strip municipalities of their ability to allocate tax exemptions in a way that maximizes benefits to the community as a whole.
2) Municipal governments adopt rigorous benefits tests with clear criteria for evaluating whether or not the services offered by a recipient provide a benefit to the community. All tax exemption recipients should be treated fairly and equally, regardless of whether they are a service organization, a sports association, or a place of worship. The benefits tests should ensure that potential recipients provide a benefit to the community that is accessible to all, that recipients do not discriminate or break the law, and that they do not operate commercial enterprises.