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Good morning your honors, Ladies and Gentlemen.

The topic for our debate is to let it


be resolved that the church property should not be exempted from taxation.

We the affirmative side believe that this statement is true. We define church property as
property or INCOME owned by a church. Let me emphasize PROPERTY and INCOME
OWNED by the church.Ladies and gentlemen, taxes are the driving fuel that propels all
programs and activities of the state. It was defined as the amount of money that we have to pay
to the government so that it can pay for public services such as roads and schools which benefit
who? We, the constituents of our government. It is a COMPULSORY, not optional, contribution,
imposed by the legislature or other competent authority upon the public as a whole or a
substantial sector thereof, with the revenue from the tax to be utilized for the public benefit or to
provide a public service.When a person or company is taxed, they have to pay a part of their
income or profits to the government. When goods are taxed, a percentage of their price has to
be paid to the government.

Why is it necessary for the church property to be taxed?

First point that Ill be discussing is the power of taxation vested upon our government.
One of the inherent powers of the state is the power of taxation. It is the power to impose and
collect taxes and charges on individuals, goods, services, and other to support the operation of
government. The purpose of taxation includes financing of government spending, reduction of
the gap between the rich and poor, reduction of consumption of goods, inflation control and
protection of local industries.

Finally, taxation of church property is necessary because the foundation for their tax
exemption no longer applies. Historically, the primary reason that churches have not been taxed
is because they have been interpreted from a legal standpoint to be non-profit. What this simply
means is that they do not exist for profit as a business enterprise.

This is not to say that churches operate as corporations selling services for the
accumulation of economic wealth. The transactions made by churches and the resources that
they consume are rightfully taxable. Previously, governments and laws assumed that religion
would not be used for profit. Today, however, the use for profit can and should be interpreted
in relevant ways. If reason did not progress and logic did not strive to be specific about defining
problems and finding solutions, we as a society would still believe that the earth was flat. We
would simply rely on past assumptions despite their clear flaws. The non-profit status of
churches should not simply be assumed, because they used to be non-profit in the past.
Governments should ascertain if a church truly operates charitably and tax the elements that
rightfully must contribute to society.

Second, according to Section 28 (3) of Article VI of the Philippine Constitution that


real properties of religious and charitable institutions not actually, directly, and exclusively used
for religious, charitable, or educational purposes shall be subject to the real property tax. It was
very evident based upon the statement the the church as an institution, or its constituent
dioceses, parishes and congregrations, which are entities that are MUCH MORE than mere
buildings. If we go by the mentioned provision, other church property should be taxed if they are
NOT EXCLUSIVELY used for religious purposes. Convents, for instance, are subject to property
tax. School buildings with a dual purpose- as residence for priests/nuns and as school, since
this is no longer exclusive use should also be taxed. The presence of a chapel in a convent
does not make the convent a religious building. It is just an ordinary residence with a chapel. It
is similar to a chapel in a mall- the mall remains a commercial building.

If real property is used for one or more commercial purposes, it is not exclusively used for the
exempted purposes but is subject to taxation. The words dominant use or principal use
cannot be substituted for the words used exclusively without doing violence to the
Constitutions and the law. Solely is synonymous with exclusively.

Giving statistics state that the church spends 85 percent of the funds it
receives on internal operations and only three percent of our money goes
towards aiding and ministering towards the unsaved.Transparency that is
unheard of today in the management of church funds, is another reason why
churches must pay taxes like the rest of us.
In a 1997 case the Arkansas Court of Appeals said that ownership of the property by a church is
not necessary to entitle it to an exemption in which use is determinative of entitlement. The
property must be used for church purposes. If the property is being used by the owner with a
view toward profit, it will not be exempt.

Third and probably the last point Ill be dealing with was the provision stated in Section
30 of the Tax Code wherein income from properties and activities conducted by non-stock and
non-profit organizations for profit is subject to income tax. Moreover, it is also stated in Article III,
section 5 that our constitution does not prohibit imposing a tax on the sale of religious materials
by a religious organization. This means that income earned by the church from the sale or lease
of its real property is actually subject to tax. In addition to that, income derived from any of their
properties, or from any of their activities conducted for profit regardless of the disposition made
of such income, shall be subject also to Philippine income tax.

This was supported by the recent case filed by the Cebu City government against
Perpetual Succour Hospital which is run by religious nuns. The city wanted to collect taxes on
the pharmacy and real estate leasing operations done by the hospital because these are not
covered by the tax exempt status of the hospital. The BIR imposed the tax when it found out
that almost P11 million income of the hospital was turned over to Sisters of St. Paul of Chartres,
the congregation that operates the hospital. It added that if a charitable institution conducts any
activity for profit, such activity is not tax exempt under the Tax Code.The court, however,
reduced the deficiency tax assessment to only P8.1 million to exclude interest and penalty,
stressing that the petitioner honestly believed in good faith that it was not tax liable.