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Monti to close Italian Church property tax loophole

Mario Monti’s moves to end a waiver on property taxes comes just as the Holy See shows concern at its financial state.

Italian premier Mario Monti meets with Pope Benedict XVI in November. Monti has announced plans to close a tax loophole which may cost the Italian Church up to €2 billion a year.
Italian premier Mario Monti meets with Pope Benedict XVI in November. Monti has announced plans to close a tax loophole which may cost the Italian Church up to €2 billion a year.
Image: Riccardo De Luca/AP

ITALIAN PRIME MINISTER Mario Monti is reportedly seeking to end an arrangement where the Italian Catholic Church does not have to pay taxes on much of its properties.

The move, which is to be presented to parliament in the coming days, a move which some estimates believe could hit the Church by as much as €2 billion a year.

Reuters says the move has the blessing of the European Commission, where competition commissioner Joaquin Almunia has previously complained that the Church’s tax arrangement presents unfair competition.

The current legal arrangements mean that the Church does not have to pay taxes on commercial premises as long as they include a religious function.

This means that Church-owned hotels, hospitals and schools are not liable for taxes as long as they house a chapel or some other kind of oratory which allows them to be used as places of religious worship.

It is not clear precisely how much the closure of the tax break will cost the Church, or whether it would be asked to pay arrears for previous years of avoidance.

The Financial Times said a newspaper representing Italian bishops put the annual bill at €100 million, while local authorities said it was €600m and other newspapers put the figure at closer to €2 billion, according to unofficial estimates.

It also points out that by some estimates, the Church and Vatican are thought to own as much as a fifth of the entire country, with over 100,000 properties.

It is difficult to estimate precisely how much the Church could be expected to pay, simply because of the mammoth size of its property portfolio and the lack of clarity on whether some properties may still retain their tax exemption.

The measure had been considered by the previous administration of Silvio Berlusconi, but had not been pursued for fear that it could antagonise the Church given Berlusconi’s high-profile personal life.

The news came a day after a little-known Church body – the “Council of Cardinals for the Study of the Organisational and Economic Problems of the Holy See” – ended a two-day conference at the Vatican.

They ended their meeting with a communique which raised concern “at the prevailing general crises, which has not spared even the general economic system of the Vatican”.

“This is evident above all as regards the Holy See, which receives indispensable subsidisation from the free offerings of the faithful,” they said, thanking churchgoers for their regular donations to keep the Church afloat.

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Gavan Reilly

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