An online debate has called into question whether Bermuda’s churches should retain their tax-exempt status.

The debate sparked up last week when 134 of the island’s churches and rectories paying zero land tax, as recorded on the Land Valuation and Tax website, were listed in a posting on the Bermuda Government’s Facebook page.

When contacted by this newspaper, the One Bermuda Alliance said it had not considered imposing a land tax on churches.

The land tax on non-exempt properties in Bermuda ranges from $3,600 per year to $576,000 per year according to the Land Valuation Department and the island has one of the highest numbers of churches per capita in the world.

Churches, while not officially regulated, gain their exempt status because of the social role they are charged with.

As well as land tax exemption, churches are also subject to class C payroll tax payments of 6 per cent — the second lowest of five payroll tax brackets. Churches do pay Foreign Currency Purchase Tax along with other government fees and taxes while financial donations made to the church are tax deductible.

Some of those posting on the OBA’s page suggested that churches, as well as abandoned properties not paying land tax, should be subject to a temporary tax while the government climbs its way out of debt, expected to hit $2.44 billion by March 31, 2017.

Another suggested it would be unfair to tax all churches as there is a charitable element to what many of them do, yet said they should be held to the same reporting standards as charities in order to be able to solicit donations and be eligible for tax-free status.

A Ministry of Finance spokesman said: “The Government appreciates all of the excellent community work that our churches do and consider that they pay their fair share of taxes. What is being suggested by online commentary has not been a consideration of the Government.”

Jonathan Portes, principal research fellow at the National Institute of Economic and Social Research and one of three who sat on the 2015 Fiscal Responsibility Panel, said its report had noted that Bermuda’s land tax system could be “rationalised” without specifically referring to churches.

The report, which included debt reduction in its remit, said: “[Taxes on land and property] could be increased in the short term, while considering longer-term reforms to improve equity and efficiency.”

Mr Portes, who was chief economist at the UK’s Cabinet Office where he advised Number 10 Downing Street on economic and financial issues, told The Royal Gazette: “We noted that the land tax system is complex in Bermuda and, in an ideal world, it could be rationalised but we decided, given the other things that were on the government’s agenda, and given that the government does not have a huge number of civil servants to work on tax issues, that it wasn’t a top priority.”

He did say that the issue could be revisited in future reports.

Brian Duppereault, chairman of the Spending and Government Expenses Committee, said that finding revenue was not in the Sage Report’s remit, only finding efficiencies in current spending.

The Salvation Army’s Bermuda divisional commander Major Frank Pittman warned that small, well-meaning churches could be crippled if faced with additional charges.

The Salvation Army, a church with a charitable arm that saw its government funding slashed by $50,000 in the last budget, is entirely funded by what it raises in Bermuda with no funds being transferred from the parent charity’s resources in Canada.

“We are 100 per cent funded from a small population base,” Major Pittman said. “Not only are we providing a church but we are providing social programmes and it would challenge us more than we already are.

“We have a lot of property but it is social and church property such as Harbour Light and the thrift store.

“The church is a foundation of the community and we have to protect it and keep it as a solid foundation for our island. If the church falls it is a risky situation because of the moral and spiritual influence that the church gives to the community. Without that we could be impacted seriously.”

Asked whether he thought any churches in Bermuda had the financial capacity to afford such taxation, Major Pittman added: “It would be hard to determine which churches to charge and which not to — it would be a hard line to draw.”

Former senator and pastor of Vernon Temple AME in Southampton Leonard Santucci is of the view that “if it’s not broken, don’t fix it”.

“Historically, you will find that this has been the case going back thousands of years into biblical times. They are earning the tax breaks based on the services they provide for the greater good of the community from worship and prayer to divergent forms of counselling. We go into prisons, we have a partnership with Heron Bay School and we have a partnership with Southampton Rangers Sports Club.”

Unlike charities, churches without a charitable arm are not required to report their financial information. Rev Santucci conceded that with no regulation in place it is difficult to prove to the public that all of Bermuda’s churches do their bit to earn their tax break yet questioned whether the wider public has a right to know.

“I am not opposed to financials being published. Most mainline denominations have annual meetings where they make known their statistical reports. If someone has a concern we could probably raise that with the government with reference to making certain things known and available.

“To a certain extent, certain information is made available to members of a club or organisation. If you are not a member there is a legitimate question as to whether or not you are entitled to know.

“I believe everybody should be answerable to somebody — I am answerable to my congregation, to my presiding elders, I am answerable to my bishop but most importantly I am answerable to my God and my conscience.”

Economic commentator Larry Burchall said he was not opposed to churches having to file their financial records but did not see introducing taxes as an option.

“In the US this is a multi, multibillion dollar industry, taxing them is a viable thing to do,” he said. “That facet doesn’t exist here. The Church of England here is a large property owner with what we call the Glebe Lands in Pembroke that were vested in the church. Others such as the Seventh-day Adventist churches have been built with Adventist money.

“I think they should remain tax free as long as it appears, or seems on the surface, that they are doing God’s work. You could lob them in with charities and require them to provide accounts.”

If a church owns additional properties beyond the house of worship and the residence of the pastor, then they must pay tax on the additional properties — the exemption does not cover any apartments from which they derive rent.

Diane Elliott, director of the Land Valuation Department, said that, more and more, the department finds itself turning down applications for tax-exemption on the residences as much of the church’s work can now be done from an office within the church.

“Every year or other year, a church puts a pastor in a house and asks for an exemption as a parsonage,” she said. “We ask if there is a church office from which that minister can perform his duties. Most churches these days do, in the past they didn’t. If he isn’t performing duties from his house then no, the house is non-exempt.

“Most times we do not grant the application because they don’t meet the test. Some of these historic parsonages might need to be revisited.”