Taxes, death and the clergy

By Afamasaga M. F. Toleafoa 16 April 2017, 12:00AM

Taxes and death are said to be two things us humans cannot avoid in life. 

But whoever said that did not factor in Samoa and its tax laws, which up to now have exempted the members of the clergy.  

In other words, church ministers in Samoa don’t pay tax.  That may be about to end however if government goes ahead with plans to have church ministers pay taxes like everyone else.  Public consultations are being conducted on the subject, and so far only a handful of members of the cloth have publicly expressed a view. 

And as might be expected, they see no justification for not maintaining their tax free status. Most people will avoid paying taxes if they can, and the members of the cloth prove no different it would appear.

In fact evidence suggests the more money one has, the more averse one is to paying taxes. Sir Bob Jones, the maverick NZ millionaire that made his money in real estate like Donald Trump is recorded as saying that it is the duty of every law abiding citizen to avoid paying taxes. 

He fancied himself a wit too, with a caustic sense of humour. President Trump has shown himself to be of the same ilk, but without the sense of humour or the charm. 

He it was who openly boasted about his ability to manipulate every loophole in the US tax laws including declaring bankruptcy when it suited his purposes, to minimize his tax bill. Trump’s campaign promise to change the US tax system so the richest Americans like him pay less tax and the poor pay more has yet to be tested. But such are the politics and morality or absence thereof, of tax. 

Most of us have firsthand experience of Samoa’s two main forms of taxation, VAGST, a consumption based indirect tax, and the more direct tax on people’s earnings. 

Both are founded on tax principles at least in democracies, of equality and fairness. The underlying twin philosophies are that firstly, irrespective of status or calling in life, everyone must pay his or her share of taxes.  And secondly, that the amount of tax paid must be in line with a person’s ability to pay, as measured by his or her net income. In other words, the more money you earn, the more tax you pay or as the Bible puts it; “to whom much is given, much is expected.”

With VAGST, one pays tax only when buying from the shop or from some other outlet, and the larger the purchase, the higher the amount paid in tax.  VAGST has the attraction for governments of being fair on every one and being relatively easy to collect with minimal scope for tax avoidance.  It also has the added ability to promote local production and to discourage consumption of shop bought items from outside Samoa. Apart from the obvious economic benefits, this form of consumption based tax can also help turn our deteriorating health outcomes around by making people consume healthier local food and drink in place of the processed imports. 

Similarly with direct income tax, a graduated tax code helps differentiate between the various levels of incomes earned. Under a graduated tax regime for example, as income rises, so does the rate at which it is taxed with those at the top paying the most tax compared to those at the bottom. Allowance is also made for people at the very bottom not to pay any tax at all if their income does not reach a designated amount. 

There is a lot more to taxation than this very brief outline of its principle values and how they apply in practice. For apart from being a means for governments to raise revenue, taxation is also one of the principal tools governments use to direct and influence a country’s economic growth and social development. 

In fact, there is hardly a part of our national life that is not touched in one way or another by taxation. Samoa’s economy has undergone significant changes in recent times; considerable wealth has been created and accumulated. One can understand therefore the need to review our tax laws to ensure that they continue to be relevant and to comply with our tax system’s governing principles. 

As said earlier, a part of this review includes looking at taxing the clergy which has remained outside the system up to now. One can understand the need for such review. To begin with, Samoa is one of the few places where the clergy is exempt from general taxation. It is not clear how this came about in the first place, but it will most likely have everything to do with the way the clergy was supported in their work in the early days when our tax system first started. Monetization has been one of the standout features of Samoa’s economy in the last fifty years with globalization as major driver. Economic activities and transactions that were largely outside of the formal economy and were conducted in barter mode are now done with money - hard cash.

And one of the activities most significantly affected by this process is the church and the support of the clergy. No longer the piece of land donated to the church pastor by the congregation plus the free labour to help cultivate it for the support of the pastors needs,  augmented by donations of food and where available, some money. 

The donations have continued but now in quantities and sums that equate with the highest earners in the land. As Samoa’s economy has grown and extended its reach to outside Samoa, so has access to cash incomes that have made possible the opulence that makes the church in Samoa stand out like no other. This is a far cry from conditions when our tax laws were first introduced and one suspects, is one of the main reasons that taxing the clergy is part of the current review by government. 

It has been argued by the clergy themselves that the nature of their work warrants its members being exempted from taxation. The contribution of the clergy to the spiritual life of the nation speaks for itself. But the question is not whether the clergy is paid enough for the work it does, but rather whether its earnings are large enough to qualify its members to pay  taxes like everyone one else.  And that is a question that can only be answered when those earnings are set against the nation’s tax code. If for example they don’t come up to the minimum threshold designed to help the poor, then there will be no tax paid. Any tax paid will depend as said earlier on ability to pay as measured by income. 

As to whether being a member of the clergy as agued is more taxing than other pursuits, that remains an opinion only that has not been tested. But evidence suggests there is no shortage of people entering and staying long in the church compared to other comparable callings such as teaching and farming. The work may be hard as claimed, but so is the material reward when compared to other professions.

With regard to whether people working for the Gospel should pay taxes or not, the Bible is the only infallible guide on such biblical matters and the answer is clearly yes. The Gospel has been in the world now for 2000 years although Samoa’s Christian experience is of much recent origin. But the practice of taxing the clergy is well established and grounded on biblical guidance. The wheel need not be re-invented by arguing the issues again. The church as an institution is exempt from tax, but not because of the spiritual nature of its work, but because it is a non-profit institution like many other similar organizations engaged in non-profit activities. As sometimes happen, some of these organizations branch onto profit making business activities, the law requires a separate registration as such and a change in tax status.    

Unfortunately, public dialogue on the subject has been severely clouded by extraneous elements such as the mix of Samoan beliefs and practices on religion and Biblical teachings which characterize religious practice in Samoa today.  Samoan culture with values and practices rooted in pre-Christian Samoa is today the acknowledged partner and pillar of the Gospel. “E tua le Tala Lelei ile aganuu, e tua foi le aganuu ile Tala Lelei;” Samoa’s own form of Christianity it is claimed with pride. But it is the beliefs and values and practices of that so called Samoan Christianity that are being brought to bear upon the subject of the clergy and taxation with unhelpful consequences. 

Already, one hears expressions of the sorcery founded and non-biblical fears that taxing the ministers of the church will result in God punishing Samoa. Linked to it is the ubiquitous message from the pulpit about the blessings that will result from giving generously to the ministers and the church, without any regard to whatsoever to the Bible also says explicitly and clearly about the form of giving that God will accept and bless. The result as we know and witness, has been a praise-and -shame form of giving and worship more in line with Samoan culture ancient worship practices than with the Bible’s Gospel teachings. 

One of the inevitable results has been the conspicuous enrichment of the clergy and the church, and the interest now shown in them by the tax man.

 (To be continued) 

By Afamasaga M. F. Toleafoa 16 April 2017, 12:00AM

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