Finance minister stresses equitable taxation; religious groups welcome  the move but call for proper preparation 


Korea’s Finance Minister Bahk Jae-wan touched off a debate about levying taxes on clergy to ensure equitable taxation, a highly sensitive topic that directly involves the country’s religious communities.

“In principle, priests, ministers and monks should not be exempt from paying taxes on their earnings,” Bahk said in a TV interview Monday. “In the past, the country was lax in terms of collecting taxes but there is a need for change.”

Bahk said the Korean government might be reviewing the taxation for clergy during the forthcoming deliberations to overhaul the local tax codes for this year ― in line with the government’s stance that no tax exemptions should be allowed at a time when social welfare payouts are on the rise.

Collecting taxes from clergy, however, is a complicated issue for Korean policymakers, partly due to the longstanding respect for their social roles such as volunteer work for the poor. Also tricky is the absence of specific standards as to which criteria should be applied to religious institutions.

The local religious communities ― Buddhists, Catholics and Protestant Christians ― expressed largely positive responses to the debate about taxation but cautioned that systematic approach, especially concerning deduction rates, should be in order.

The National Council of Churches in Korea, a group representing some 20,000 Protestant churches, welcome the move, saying that it agrees to the equitable taxation principle.

“There is not yet a specific tax code for clergy, so we suggest the administration set up a communication channel to discuss possible options,” said Rev. Kim Tae-hyun at the NCCK.

Religious sources said the income, however, varies widely from church to church, making it hard to establish universal tax rates. Moreover, many of the Korean clergy struggle financially as they spend the bulk of their income on charitable projects or church projects.

Hwang Ho-chang, professor of Sejong University, said that the taxation infrastructure for the local religious institutions is yet to be built up.

“Ahead of major elections this year, some religious groups might oppose discussing the taxation issue, which could push the government to retreat again,” Hwang said.

Bahk admitted that asking the religious communities here to pay taxes overnight would be far from easy and careful preparations are required.

“There is also the need to take into consideration how best to deduct expenses incurred by religious activities.”

Korea first tackled the issue of taxing clergy members in 2006 when the National Tax Service asked the Finance Ministry to explore the feasibility of such a move. But the proposal got nowhere as policymakers did not amass enough support from the public at the time.

Public opinion, this time around, remains positive. After Bahk’s comment was aired, the country’s major newspapers expressed their support for the taxation for clergy.

The Korea Institute for Religious Freedom, a think tank, conducted a survey recently asking about such tax levy targeting the clergy members and 64.9 percent of respondents said they support the move.

In a separate poll of 1,500 law professionals in the country, 85.1 percent said the government should levy taxes on the religious institutions to enforce fair taxation principles.

Some of the clergy members are already paying taxes voluntarily. The Catholics community, for instance, has been paying income taxes since 1994 and a similar campaign is taking place in the Protestant churches, as well.

As the potentially explosive issue attracted media attention, the Finance Ministry said its official position is that it has no plans yet to levy taxes on the clergy.

By Yang Sung-jin  (insight@heraldcorp.com)