Heated debate breaks out over taxation of local clergy

SEJONG - The separation of church and state is a cornerstone philosophy of a modern democratic country after hundreds of years of struggle between the religious and secular worlds. It forbids the government from setting up an institution that either gives preference to a religion or limits freedom of belief.

Article 20 of the South Korean Constitution promulgates the church-state separation: “No state religion shall be recognized, and religion and state shall be separated.”

In reality, however, there are always exceptions.

Religious communities like the Protestant and Catholic churches and Buddhist temples have been the only sanctuary from state taxation for more than half a century. Christian priests, pastors, nuns and Buddhist monks do not pay income taxes at all no matter how much they earn.

The South Korean government has granted the income tax exemption to the clergy since its establishment in 1948.

Some 70 years later, the privilege is just about to be removed as a revised tax law that levies dues on religion-related earnings takes effect Jan. 1 after a two-year grace period.

“The government will begin a new taxation scheme to impose income tax on those in the religious community next year for the first time in history,” said Kim Jong-ok, a director at the Ministry of Strategy and Finance. “The current income tax law has no clear clause on earnings from religious activities. We’ve revised the law to precisely include religious people in the list of state taxation.”

But the controversy was recently rekindled after some lawmakers proposed a bill to put off the implementation of the religious taxation for another two years, citing a lack of administrative preparations.

Some theologians believe that the tax write-off came partly from the religious community’s contribution to the modernization of Korea in the 19th century and the liberation from the 1910-1945 Japanese colonial rule. Starting in the late 19th century, foreign Christian missionaries established modern schools to teach Korean illiterate children, while Buddhist monks had stringently opposed Japanese aggression over the years.

The government had tried to collect tax from religious leaders in 1966, when the National Tax Service was established, but soon withdrew the plan due to strong backlash.

For the past 70 years, non-religious civic groups have strongly demanded the government deprive churches of all denominations of such a privilege, when everyone else in the country is obliged to pay tax in accordance with the Constitution.

They argue that there is no legal ground for exempting religious people from paying tax, a public duty that all people shoulder.

“A democratic country is based on a fair taxation system. Equal income comes along with equal tax. If this principle collapses, people will not want to pay their dues, and the country won’t function,” said Kim Sun-taek, head of the Korea Taxpayers Association, a Seoul-based civic group. “Priests, pastors and monks are all South Korean nationals. They have to pay tax, as well as other ordinary people.”

Large churches have tens of thousands in their congregation and large buildings in the center of Seoul, and their chief ministers are provided with large incomes, but they don’t pay taxes, he pointed out.

Kim said the religious tax waiver is a form of “collusion” between corrupt politics and depraved religions that started with former authoritarian governments that had weak democratic legitimacy.

Several civic groups staged a protest in Seoul on May 31, 2017, to demand the government enforce the revised tax law that imposes income duties on religious people.

As a result, some politicians have been reluctant to take action as they are worried about losing hundreds of thousands of electoral votes that the Christian and Buddhist leaders can affect.

Churches and religious organizations are free to make any comments on social and political issues, and they even speak out for or against political candidates at services during election campaign periods.

According to state tax data, some 200,000 people are members of the clergy and will be newly included in the expanded taxation scheme, but only 25,000-50,000 of them are expected to actually pay taxes.

Those who earn 12 million won ($10,600) or over are subject to income tax in South Korea, with a rate set between 6-38 percent.

The latest data compiled by the Ministry of Employment and Labor shows that a Christian pastor has an average income of 28.55 million won, followed by a Buddhist monk with 20.51 million won and a Catholic priest with 17.02 million won. In comparison, an average South Korean employee is paid 39.5 million won per year as of 2015.

“Only a few people actually have enough taxable income to pay. [Religious taxation] is not a matter of money,” said Kim from the finance ministry, adding that the government is forecast to collect an additional 10 billion won in income tax from the clergy.

Catholicism, Buddhism and progressive Christianity are supportive of tax reforms, saying that many leaders of their religions have been paying income tax on a voluntary basis.

“As a South Korean national and the representatives of the Buddhist order, we will lead by example,” said a spokesman for the Jogye Order of Korean Buddhism. “We’ve prepared for paying tax since 2015, when the government first announced the plan.”

But some conservative religious groups are against the government’s plan to lift the tax waiver, claiming that the government may interfere with religious affairs through tax investigation.

“We oppose legislating a law to tax clergy,” the conservative Christian Council of Korea (CCK) said in a statement released in 2015, when the revised tax bill passed the National Assembly. “Big churches have been paying taxes spontaneously. It is desirable for the tax authorities to encourage churches to voluntarily pay their dues.”

An official from the CCK refused to give a fresh comment on the issue.

Despite such controversy, the finance ministry said it will move forward with the tax plan as scheduled and make constant efforts to help clerics report their income and pay fair tax.

“The finance ministry has prepared the waiver lift for years and has been in constant talks with the religious community,” Vice Finance Minister Ko Hyoung-kwon said earlier. “There is no change in the government’s stance and schedule.”

Yonhap