Paul L. Caron

Monday, September 3, 2007

Dispute Erupts Over Tax Breaks for Vatican

Last month, I blogged the news of Pope Benedict's doctrinal pronouncement condemning tax evasion as “socially unjust.”  The news attracted a lot of critical commentary, none more ascerbic than Walter Williams' The Pope Sanctions the OECD Thugs:

I share Pope Benedict's desire to assist our fellow man in need. But I believe that reaching into one's own pocket to do so is praiseworthy and laudable. Reaching into another's pocket to assist one's fellow man in need is despicable and worthy of condemnation.

Press reports this weekend say that the European Commission is investigating complaints that tax exemptions for the Vatican are flouting EU rules:

A row over alleged Vatican interference in Italian affairs has erupted after a demand by the European Commission for Italy to explain tax breaks for the Catholic Church on income from property. At present, the Italian state offers the Church about £680m worth of tax breaks from income tax receipts and exemption from the payment of local authority taxes on most of its property. In addition, some of the Church’s major business activities such as education, hospitals, clinics, hotels are only charged at 50% of the regular corporation tax rate. This equates to a huge tax saving on the 18 hospitals, 55 clinics and 250 schools owned by the Church in Rome alone, according to Italian media. The tax breaks at the centre of the row stem from the 1929 Lateran Treaty between Italy and the Holy See.

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This is a very big issue in Italy and presents an interesting clash in domestic and EU as well as church and state priorities, a marvelous paper topic for anyone who can manage a small bit of Italian (or perhaps, Latin) and has an interest in these issues.

Posted by: Michael Livingston | Sep 3, 2007 1:05:21 PM