Italy Plans to Tax the Church on Commercial Property
By RACHEL DONADIO
Published: February 16, 2012
ROME — Over the years, the Italian government has quietly passed scores of laws that benefit the Roman Catholic Church, but it is rare for it to issue a public statement announcing that it intends to strip the church of privileges.
The government of Prime Minister Mario Monti took that step on Wednesday, telling the European Commission that it would change Italian law to ensure that the church pays property tax on the parts of its buildings used for commercial ends.
The church owns vast amounts of property in Italy, and the move is aimed at making sure that convents that offer bed-and-breakfast services or church buildings that rent space to shops pay their share of taxes.
The change — once it is formally drafted and approved by Parliament — could result in revenues of $650 million to $2.6 billion annually, according to municipal government associations. It could also set an example for other European countries that are struggling with debt — notably Greece and Spain — and where there is growing popular resentment over tax breaks for the church.
The proposal shows how Mr. Monti, a churchgoer himself, is able to read the national mood. Facing higher taxes and their own belt-tightening, Italians are fed up with what they see as unfair privileges — be it of the political class or the church. After austerity measures were passed in December, 130,000 people signed an online petition calling on the government to revoke the church’s tax-exempt status.
“It was time that they paid, too, with all the exemptions they’ve had throughout the years,” said Marco Catalano, 35, a shopkeeper in Rome, who said he goes to church twice a month. “They own the most beautiful buildings in downtown Rome, on Italian soil, and rent them out at market prices. They don’t give them for free or at low prices for charity.”
Many church buildings fall into a gray area, taking advantage of a tax exemption for religious organizations’ buildings even if they are largely used for commercial purposes.
In a statement to Joaquín Almunia, the vice president of the European Commission, the government said it would revoke the tax exemption for church property whose commercial use is “not only exclusive but also prevalent.” It also proposed that the Finance Ministry draw the line between taxable and tax-exempt spaces within the same building — a difficult provision to enforce.
The European Commission opened an inquiry in 2010 into whether tax exemption for the church amounted to illegal state aid and stifled competition. As an antitrust commissioner on the European Commission from 1995 to 2005, Mr. Monti handled competition issues.
Mr. Monti, who became prime minister in November, is following regular pendulum swings on the issue. In 2005, the government under Prime Minister Silvio Berlusconi quietly extended the church’s exemption from local property taxes. The next year, the center-left government reinstated a tax for buildings of “nonexclusive commercial use.” Last year, a new Berlusconi government re-extended the church’s exemption.
In a statement on Thursday, the Italian Bishops Conference said, “We are waiting to find out the exact formulation of the text to be able to offer a more precise opinion.”
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