Tax axe falls on churches
published: Sunday | September 14, 2003

Glenda Anderson, Staff Reporter

CHURCHES ACROSS the island will now be required to pay General Consumption Tax (GCT) on all goods and services purchased for which the tax is applicable.

This follows recent changes to local tax measures by the Finance Ministry. Officials at the Tax Administration Services Department (TASD) in Kingston say previously church officials were free to apply for a tax waiver or relief on some goods.

Many churches had been using the provision especially to assist in purchasing material for construction, for community projects or to help in lessening the cost of importing equipment and furniture from overseas.

"Those things for which GCT was applicable they could have sent a letter in, along with their invoices and they were usually granted a waiver on the items," one officer said.

DISCONTINUED

The waiver system has now been discontinued.

Under new arrangements, 'any service or goods purchased' by churches with the exception of worship items, will attract GCT, and the group will no longer be able to apply for relief as charitable organisations. Since the core function of the church is not as a charitable institution, it will not be exempted from paying taxes on goods and services. The church is one of the largest charitable groups in the country, providing care for the elderly, after-school programmes and youth-related programmes. Unlike many other organisations, the church works year round in communities and not on a seasonal basis.

TASD officials said the areas to be affected could include all building and construction items such as blocks and steel, as well as furniture, chairs, desks, tables and other equipment.

A representative of one local Baptist church was unaware of the change but said the church had always relied heavily on the system especially for items sent from affiliated churches or groups overseas.

"Normally we'd apply for a waiver for stuff coming in for our outreach programme. We'd get things for the communities like clothing and other gift items," she said.

The withdrawal of a waiver could usher in harder times for the church, said Roman Catholic Archbishop Egerton Clarke. He too was not fully aware of the details of the new arrangements.

AFFECT NEGATIVELY

"It is going to affect the church negatively," he said. "We may have to cut back on some of the things we do and some of the services we provide."

There are 26 main Catholic churches in Kingston and St. Andrew, with some of these having further responsibility for two or three mission churches attached to them. The religious body also operates several schools and the St. Joseph's Hospital.

"We certainly have benefited in the past, in that we have been able to apply for and have been granted waivers in some areas. What this means is that it's going to cost us that much more. I'm not sure where we're gonna stand," the Archbishop said.

He said waivers approved by the Finance Ministry included those for importation of vehicles used for educational or social services, architectural drawings submitted to the Kingston and St. Andrew Corporation (KSAC), and construction material bought to be used in social projects.

But one other church leader has questioned the reason for change.

"It's the inconsistency that irks," said Reverend Carl Johnson of the Jamaica Baptist Union.

"If it is agreed that we are all stakeholders in nation-building, then you can't say that you are going to exempt some (groups) but tax others for the same services simply because that might not be their primary function."

The tax department said items designated for worship will still be zero-rated. These include sacred texts, song sheets, communion items, candles, incense, and offertory envelopes.