British Government warns against tax breaks for Scientology

Thursday, October 21, 2010

The new British coalition government has warned local authorities in the United Kingdom not to provide tax breaks to branches of the Church of Scientology. After an investigation by The Guardian newspaper revealed that several local authorities have granted Scientology tax breaks worth over a million pounds, Secretary of State for Communities and Local Government Eric Pickles intervened to urge councils to end the practice.

Pickles noted in a statement that Scientology was not officially recognised in the UK as a religion or a registered charity and was not eligible for tax relief. Pickles commented, “I do not believe the majority of the public would want their own council to be giving special tax breaks to such a controversial organisation.”

The minister’s intervention followed the disclosure by The Guardian that at least four local authorities have given Scientology lucrative tax discounts on branches in their areas. These included:

• The City of London Corporation, which gave an 80% tax exemption worth £1.3 million to the flagship Scientology centre in the City of London. The corporation justified the exemption on the basis that Scientology could be considered to be a charity either for the advancement of religion “or other purposes beneficial to the community”. It said that it feared being sued by the organisation if it discontinued the exemption.

• Westminster City Council granted 80% rates relief to the Scientology Celebrity Centre in the Bayswater district of London. This saved Scientology £165,303 over the past ten years, though as of July 2010 the centre is no longer in use. The council determined that Scientology was a “non-registered charity” that is “beneficial to the community”.

• Birmingham City Council awarded the Church of Scientology Religious Education College an 80% tax discount on the grounds that the property was an educational institution.

• The City of Sunderland gave the Church of Scientology’s branch in the city tax relief worth £30,000 over five years.

Camden London Borough Council refused to disclose whether and how much tax relief had been granted to the Scientology branch in the London Borough of Camden. Other local authorities, including Manchester City Council and Mid Sussex District Council, said that they charged Scientology the full commercial rate.

In response to The Guardian report, Eric Pickles issued a statement saying that Scientology should not receive privileged tax status and did not deserve to do so, “Tolerance and freedom of expression are important British values, but this does not mean that the likes of Church of Scientology deserve favoured tax treatment over and above other business premises. The Church of Scientology is not a registered charity, since the Charity Commission has ruled that it does not provide a public benefit. Nor are its premises a recognised place of worship. Councils may award charitable relief. They should take into consideration the Charity Commission’s rulings when weighing up whether to do so. I do not believe the majority of the public would want their own council to be giving special tax breaks to such a controversial organisation.”

The controversy was the latest in a series of disputes involving Scientology’s tax status in the UK. Scientology is not officially recognised as a religion. The Charity Commission for England and Wales rejected an application in 1999 by Scientology for charitable status, ruling that its activities did not meet the “public benefit” test. However, in 2000 Scientology obtained exemption from Value Added Tax (VAT) on the grounds that its services were educational and non-profitable. It successfully sued HM Revenue and Customs for the return of £8 million in overpaid VAT.

A spokesman for the Church of Scientology told The Guardian, “Scientology is very popular with those who have visited our churches, met with Scientologists and observed or utilised our numerous community activities that effectively address drug abuse, illiteracy, declining moral values, human rights violations, criminality and more. Local council authorities, government bodies in this country and many others, and the European court of human rights have all recognised the religious nature of Scientology or the fact that Scientologists are actively helping those in their communities as a direct reflection of their religious beliefs.”

Birmingham City Council told the local Sunday Mercury newspaper, “We have noted Mr Pickles’ comments and will take them on board.”