Will the Vatican ever pay Israel taxes due?

By DAVID S. LEVINE
Photo by: INGIMAGE

Benjamin Franklin, one of the more famous founding fathers of the US, is quoted as saying “… in this world, nothing is certain except death and taxes.” The first part may be true, but as for the Catholic Church in Israel, they are operating tax free.

The modern State of Israel was internationally recognized by the UN in 1948. It took 45 years for the Holy See finally to recognize Israel in December 1993. Regardless, the Catholic Church (like everyone else) is subject to the laws of the country it operates in. And it should be matching its actions with their own teachings: According to the New Testament, Jesus said one should “Render unto Caesar the things that are Caesar’s” (Mark 12:17 and Luke 20:25) and “Pay everyone what you owe him: taxes to whom taxes are due, revenue to whom revenue is due, respect to whom respect is due, honor to whom honor is due” (Romans 13:7).

However, ever since the creation of the State of Israel, the Catholic and other Christian churches have refused to pay taxes due Israel and its municipalities on church-owned properties and income. In 2002, the Knesset canceled certain tax exemptions to religious institutions (of any denomination) that offer health, hospitality, and welfare services (with the exception of houses of prayer like synagogues, churches, and convents), ritual baths, and educational institutions that are not commercial activities. [For a more detailed historical perspective and legal discussion, see Dr. Michael A. Calvo, Begin-Sadat Center for Strategic Studies, Israel and the Holy See, paper #2,127 dated August 27, 2021].

While it may seem reasonable that houses of prayer, ritual baths, and educational institutions be exempt from taxes, it is against internationally accepted rules of fair competition to exempt from taxes: hotels, stores, restaurants, hostels, guest houses, hospitals, welfare services, and leases of apartments belonging to churches. They operate like regular commercial businesses. They are classified as unrelated business activities and should therefore, be subject to taxes. Churches, mosques and synagogues are required to pay taxes in Israel on the profits made in Israel by their schools, hotels, hostels, hospitals. Furthermore, they are taxed on properties that are not places of prayer.

IN DECEMBER 2017, the Jerusalem Municipality asked for payment of unpaid commercial taxes amounting to NIS 650 million (about $186 million) and froze church bank accounts. In response, the Church of the Holy Sepulcher and other churches demonized Israel, going so far as to imply that Jerusalem does not belong to the Jewish state.

 POPE FRANCIS meets with members of the American Jewish Committee at the Vatican in 2019 (credit: REUTERS)

For the Holy See and other churches, the argument that Jerusalem must be internationalized and become a corpus separatum (Latin for “separate body”) is so nonsensical because (1) Jerusalem has been the capital city of Israel since King David made it so in 1003 BCE (approx. 1300 years before the establishment of Christianity by Constantine in 313 CE). And (2) the Catholic and other Christian churches also have property outside of Jerusalem, so why just this demand of Jerusalem? 

In a CUFI article of March 13, 2018, Jerusalem Mayor Nir Birkat said, “But does it sound logical to anyone that commercial areas like hotels, wedding halls and businesses should share this exemption, just because they are owned by the churches? Why should the Mamilla Hotel pay municipal tax while the Notre Dame Hotel across the street is exempt?”

Shimon Shetreet, former deputy mayor and Hebrew University law professor, was quoted by World Israel News (February 26, 2018), “There is a difference between worship facilities and commercial facilities owned by the church. Many years ago there was a similar issue with yeshivot (Jewish educational institutions focusing on Torah and Talmud) that have wedding halls. There was also the case of the Bar Association with a party hall. Places of prayer are not taxed. Places of parties are subject to taxation. There are also stores owned by churches and synagogues that pay tax. Why not? Nobody is charging houses of prayer, so these protests are totally misleading.”

WHY DO churches insist that they are not obligated to pay taxes to the Jewish state, even though their scripture states that “…it is necessary to submit to authority, not only to avoid punishment, but also as a matter of conscience” (Romans 13:5)?

The church’s disregard of the law (international and Israeli), as well as its own teachings, means that Israeli citizens, whether they be Jews, Christians, or Muslims (of Jerusalem and elsewhere) are paying more than their share for sanitation, garbage collection, municipal services, and other taxes because of taxes that are not being paid by the church’s owned commercial businesses (shops, hotels, and restaurants). Ironically, this puts a harder economic burden on the poor, who the church is committed to serve.

In addition, it should be mentioned that there are an untold number and invaluable Jewish artifacts in the Vatican archives that have been plundered over the centuries. The importance to return all of the plundered Judaica objects d’art, texts, and artifacts cannot be over stressed. [See also Dr. Calvo’s above mentioned paper and my September 19, 2021 The Jerusalem Post article “Napoleon, Hitler, Vatican: All collectors”.]

From the Jewish perspective, all these plundered items are part of the Jewish identity, history, and holy religious practices. Many original Hebraic texts contain insight into Judaism as to how and why it is practiced today. These sacred religious artifacts and objects d’art depict Jewish communal life throughout the ages.

If the Vatican’s tax bill was NIS 650 million (about $186 million) in 2017, how much is owed now, including interest and penalties?

Perhaps the State of Israel could cut the Catholic Church a deal and offer a credit against the tax bill for the return of the Jewish treasures to the State of Israel.

The writer is a former NYC advertising agency and marketing executive, and also spent five years in the financial arena. He has been an officer/board member/speaker of industry, educational, and community organizations, as well as several new business startups. Currently he is semi-retired but continues as an instructor at Rutgers University School of Communication and Information and a consultant. He made aliyah in 2015 and lives in Ashkelon with his wife. Follow on Twitter @davidslevine.


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