Taxing the Church

Off a cobblestone street in the historic city of Alcalá de Henares, the birthplace of Cervantes, roughly 30 kilometers from Madrid, a 400-year-old convent, El Convento de Clarisas de San Diego, awaits its next customer.

When the doorbell rings, a nun cries out, "Holy Mary, the immaculate!"

"Good afternoon!" a customer says. "May I have four boxes of roasted almonds, please?"

Since a nun's vow of chastity means she can't be seen in public, the four delicately-wrapped almond tins are pushed through a rotating wooden turnstile. "That will be 19 euros ($25)," the nun says, and the transaction is completed.

Profits from the nuns' almond enterprise are likely minimal. But that's beside the point, says a group of lawmakers in Alcalá. A part of the convent is being used by nuns for commercial purposes, the city council believes, and for that, the church must pay.

"We're studying whether any church properties that have long been listed as charities are actually being used for commercial activities," city councilman Anselmo Avendaño told DW. "If that's the case, they'll have to start paying taxes."

A question of 'tradition'

Avendaño and his colleagues passed a motion last summer to re-evaluate church holdings by square footage. Now, if one of a convent's 30 rooms is used to sell sweets, it will have to pay taxes on that room.

In truth, the tax system is supposed to work that way already. Those tax laws, however, have until now not been enforced.

The city of Alcalá's campaign has ruffled feathers throughout Spain. Prime Minister Mariano Rajoy told reporters last year that any efforts to press the Church for more taxes would violate a 1979 treaty with the Vatican.

"I insist, we will not renounce an international agreement adopted in 1979," the prime minister said. "It would be irresponsible. We need to dedicate ourselves to more important things."

Councilman Avendaño, a Catholic himself, believes the real issue is not about tradition but cash-strapped municipalities.

"We're not questioning the Church's good works - charity for the elderly, or poor, or infirm. What we want is to re-examine property the Church uses to make a profit; for example, rental apartments, parking lots and garages that it owns. Those are businesses."

Land holdings

The Catholic Church owns approximately half of the property in Alcalá. The city of 200,000, meanwhile, has debts of more than 300 million euros.

"Some of the Catholic schools have swimming pools, and they charge a fee to area residents to swim there on weekends," councilman Ricardo Rubio told DW. "So the school should be paying taxes on that activity. But they haven't been."

Juanjo Pico, a spokesman for Europa Laica, a Spanish group that lobbies for the separation of church and state, sees Alcalá as a symbol of a much larger problem. If the Catholic Church had to pay taxes on all its property in Spain, he says, it could owe up to $3 billion euros a year.

"These days, towns are cutting their budgets for healthcare, education, infrastructure and welfare," Pico told DW. "But the Catholic Church hasn't had to make a single cut. [That's] because it gets money from the state."

When Spaniards file their tax returns, they can check a box to donate money to the Church. The state then deducts it automatically. That transaction, too, is coming under scrutiny, particularly as Spain becomes increasingly secular.

"Something like 15 percent of Spaniards attend weekly mass," Hamilton Stapell, a historian and expert on Spain at the State University of New York at New Paltz, told DW. "A couple of years ago, there was a report out. Less than five percent of Spaniards thought the Church was one of the top three valued institutions in society."

Non-profit

For their part, Catholic Church officials believe their institution has been unfairly singled out.

"Why isn't this debate about all non-profit groups?" asked Fernando Giménez Barriocanal, the financial director of the Spanish Episcopal Conference, in an interview with DW. He says the Church has the same tax deal as the Red Cross and other NGOs.

In scale, however, the Catholic Church dwarfs those institutions. It is also Spain's biggest landowner - and by extension, potential tax target.

Yet the Church is also Spain's largest charity. At a time when public welfare programs are being cut and unemployment tops 26 percent, it provides important services to those in need.

"Obviously, we'd have to direct more of our money to pay those taxes," Barriocanal said. "The Church would still want to help those in need, but we'd have less money to do that."

Still, the Alcalá city council aims to complete its land survey by the end of the year - and, if things continue according to plans, to serve the Catholic Church with a slightly updated tax bill.