By Jamie Warren
Should the non-profit sector be taxed by municipal governments? I read an article in The Western Star about it headlined “Everyone should pay.”
The article indicated that the Town of Pasadena is debating whether or not churches and non-profits should start paying taxes. Municipal governments are struggling to provide cost-effective services to the residents. The costs to provide these services are increasing on an annual basis.
Municipal governments have limited options to handle these increases. First, they can pass those increases directly to the residents in the form of additional taxes.
Second they can increase taxes for businesses or third they can reduce services. None of these options are popular and will generate some backlash.
The idea of looking to tax the non-profit sector to make up extra revenue is what I would call a penny wise and a pound foolish. The non-profit sector by its very nature provides a valuable service to the public and puts any revenue right back into the service they provide.
Taxing groups like churches and other non-profits is really taxing yourself. I understand that someone has crunched the numbers to determine that the not-for-profit sector can potentially be a significant source of revenue.
People who do not use or value a particular non-profit service may be quick to jump on the side of taxing these organizations with the attitude of “it makes no difference to me.”
However, taxing the non-profit sector has the potential to erode the social fabric of a community.
Just about everyone in the community has taken advantage of a service offered by a non-profit group.
Let’s look at churches — they provide Christmas food hampers to the less fortunate, help people in the community during times of need and provide spiritual wellness. They also provide marriage services, baby dedication and support during a family loss.
You might not be involved in the church on a regular basis, however, it is nice to know that the service is there if needed.
If groups like churches are taxed I do not believe that they will close. Some of the smaller non-profit groups might be forced in that direction.
However, most will either reduce the service provided or pass the cost onto the users. Many of these services are offered to the less fortunate who cannot afford to pay more.
This means that in reality, when non-profits are taxed, we are really taxing ourselves at the risk of eroding the services they provide.
I understand the temptation for governments to look at the non-profit sector as an untapped revenue stream. However, I would strongly urge town councils to be careful and proceed with diligence.
The non-profit sector plays a vital role in the community and taxing them would cause everyone pain at some point.
Jamie Warren is a native of St. Anthony living in St. John’s and he is a member of The Western Star’s Community Editorial Board.