Should churches pay rates?

Some time in the last year the good people at Auckland Council decided to review their rates policy relating to landowners not currently paying rates.

Churches were informed of this review but safe in the knowledge of the exemption provided under Schedule 1, Part 1, Clause 9, of the Local Government (Rating) Act 2002, (revised 2013):

Land used solely or principally-

  1. As a place of religious worship
  2. For a Sunday or Sabbath school or other form of religious education and not used for private pecuniary profit.

– we did not worry.

Some of us were visited by a representative of the Council to assess whether any of our buildings fell outside this category. Again we did not worry.

At St Matthew’s we then got a letter in May telling us that 6% or our property had been assessed as rateable. These are our offices and, who knows, maybe our toilets as Zac Fleming wonders.

At this point we did start to worry and asked the Mayor for an explanation and for an indication of what the actual amount would be. 6% might not be much but when our land (as we then thought) was worth $13m it could be a lot. Well it turns out the Council now reckon our land is worth $32m so 6% of rates on that turns into $11,500. The final figure was only given when the bill came. So much for responsible budget planning.

The media coverage about this

has created a flurry of comments on social media.

In amongst the usual vitriol many people are asking the question – why shouldn’t the churches pay rates? That is a reasonable question to ask but that is a debate to be had with the government if people feel the law should be changed. The reasons we don’t pay are no doubt historical but if we are to debate churches being exempt then what about libraries, art galleries, sports facilities, marae, schools, airports, wharves and railway lines? Read the legislation here (Schedule 1).

By all means let’s have the national debate. In the meantime we would argue that Auckland Council have overstepped their brief. It certainly seems the staff have acted without a clear policy from the Councillors, as TVNZ reported.

The effect of enforcing this policy will be quite damaging to churches. Most churches (unlike us) have church halls which are hired weekly by thousands of community groups from Girl Guides to Parenting Groups to Foodbanks to Alcoholics Anonymous to arts and sports groups. They pay small hire fees; these fees will have to rise dramatically.

At St Matthew-in-the-City $11,000 will have to come off our maintenance spending – so what will we not do: remove graffiti from the church? pay a professional company to pick up the hoards of rubbish, needles and human waste that is left weekly at our doorstep? perhaps not change the lightbulbs, which requires an electrician with a scaffold? or not clean the gutters (with a crane) and so allow one of Auckland’s finest category one historic buildings to deteriorate?

No one else pays those bills. We look after this building on behalf of Auckland. Other churches do fine work in the community. We are all technically asset rich according to the land we own but we are very cash poor. Every dollar is given by parishioners and donors or earnt by small rentals of community space.

At St Matthew-in-the-City we own a carpark which is leased to Wilson’s Parking. We pay full rates on this property and those rates have gone up by $53,000 this period, way more than our rental increase can go up under our lease, but that is commercial reality so we pay like everyone else. We use the (now reduced) income for the upkeep of the church building and to pay some of our staff.

As charities our expenditure is audited and scrutinized, we make no “profits”, we do our best to serve with what we have. It would be good to be able to continue to do so. Make no mistake if this policy is rolled out many smaller churches will go under.

5 thoughts on “Should churches pay rates?

  1. Interesting issue. I am a bit torn, as I think sometimes ‘religious’ organisations are not accountable for things likes taxes, rates and charitable donations. The legislation governing this is from a bygone Christendom era. Many churches are now a small group of people keeping a church going. Whether the council or the state should financially support such operations is an interesting question and one we should talk about.

    I think there should be solid conversations about this at a wider level.

    What I think is wrong to spring this on Church’s without serious notice about it. It is make or break for many, and if the rates are going to go up this much, there should be some time to adjust and appeal etc.

    It is like what happened in Auckland with rates and airbnb – I am not against airbnb paying higher rates, but this conversation happened somewhere in a tall building, we were asked for information, and then it seemed the next month there was the increase in rates – double in the case of our apartment. As a business, we needed time to adjust to the new reality, and consider if our airbnb business was still viable.

    So what is lacking is transparency, and a recognition that stake holders should have been involved more. Dare I say another review is needed to address the issue of taxes, rates and charitable donations and to what extent local and national governments should support ‘religious’ organisations in this way.


  2. It would be interesting to see what legal advice (if any) the Council got before going with this. The Act clearly says “Land used solely or principally…” – surely the word principally covers off any of these other uses – hall hire etc. I don’t see how you can “split” up the land and say 6% is used for commercial purposes or whatever. Clearly separate land that is being used commercially – like your carpark (let by Wilsons as you say) is fair game for rates, but I really don’t see that they can portion out the church land like this. Church offices are hardly commercial anyway, if they are providing for staff in support of the church’s religious activities.

    Apart from the legal aspect, I do think that this is a real misstep by a local authority. The rhetoric coming out of central Government is toward support of social, wellbeing, environmental concerns rather than just a pure economic approach. As you mention, churches often provide valuable community facilities and support at costs which are well less then commercial entities – many groups and organisations that make use of these facilities will struggle if rates costs have to be passed on to them. It just seems like shooting themselves in the foot to me, and will do way more harm than the pittance they collect in rates from this move.


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