Property For Free: Taxing the church

Who is the largest landowner in Spain? The answer is not a who but a what. It is the Catholic church.

Knowing exactly how much property holding the church has and how much it is worth is not only difficult, it is virtually impossible. An estimate that has been placed on the value to the Spanish church is, in total, 158 billion US dollars, of which 16 billion are "visible", the rest being in networks of trusts and companies.

This estimate comes from a source which is a vehement critic of the church, both in Spain and elsewhere, so it has to be treated with a good deal of caution (and indeed scepticism). Whatever the real value (and another estimate puts it at around seven billion euros, so quite a difference), there is no doubting that in property terms (and others) the church is extremely wealthy. And under an agreement drawn up in 1979, it doesn't pay property tax.

Just think about this for a moment. Apart from the fact that the largest landowner is exempt from tax, whereas private individuals and businesses are all meant to pay it, if the church were to pay the tax, a not insignificant hole in the nation's finances might well be filled. How big the hole might be, who can tell? But big enough, you would imagine.

It is easy perhaps to look at a figure such as the one above and be either amazed or outraged by the scale of the holdings and by the exemption, but one has to take into account what some of the church's property is: magnificent churches and their works of art, part of the national heritage and which require an awful lot of looking after.

On these grounds, the exemption is partially justifiable, but whether complete exemption is justified, is a different matter, especially at a time of such economic hardship. And there are plenty of local authorities which are wondering just this and which are trying to figure out ways of getting a piece of the church's property action.

Two cities, Valladolid and León, are examining what they might be able to tax, while another, Zamora, is going to charge church-owned buildings for rubbish collection. These cities are following a lead set by the government in Italy where the church is also exempt from property tax. The Monti administration has announced that tax will be paid on any property that doesn't have a totally religious function; the estimated tax bill is 720 million euros on holdings of some nine billion euros.

There may be a benefit in having a politically non-aligned technocrat as prime minister. Monti is not beholden to anyone or any organisation. The same, however, cannot be said for the Spanish prime minister.

The Partido Popular came to power with the implicit (almost explicit) support of the church. For its government to now turn round and slap a property tax bill on the church is pretty much unthinkable, and were it to be even thinking of doing so, the church has been digging its heels in and rejecting any such notion.

One local authority which isn't contemplating seeking a means of taxing the church is that of Madrid. Its mayor, Ana Botella, has dismissed the idea. There again, Madrid is home to the most powerful of Spain's cardinals, while it might be remembered who Sra. Botella is: the wife of former prime minister José María Aznar, a former Partido Popular prime minister.

The church does play and is playing a significant role in providing assistance to those worst affected by economic crisis. The demands made on the Caritas charity have grown greatly, and the church's charitable work should not be underestimated in a country where there isn't the level of social benefit elsewhere. This is a further reason perhaps for looking charitably on the church and how it is taxed, or not.

But with austerity, to which one might add a tendency to greater transparency (as with the King declaring his income), the church would score enormous numbers of PR brownie points if it were to suggest that it would contribute some property tax. It's not as though it is in penury, unlike many of its flock. Not when it can count on 250 million euros a year raised from contributions through the income tax system.

It's unlikely, though, to volunteer to start paying property tax, just as it is unlikely that prime minister Rajoy will come with a tax demand. Perhaps Spain really does need the full Monti.


Any comments to andrew@thealcudiaguide.com please.