Pope Francis Weighs In on Tax Policy

September 16, 2015

In the two years since his election, Pope Francis has weighed in on several public policy issues, including environmental policy and poverty. Now, Pope Francis has also made a foray into tax policy, calling for churches and religious orders that conduct regular business activities to pay taxes on their income.

In an interview on Monday with a Portuguese radio station, the Pope was asked about his recent call for European churches and religious orders to host Syrian refugees. He responded:

Some religious orders say “no, now that the convent is empty we are going to make a hotel and we can have guests, and support ourselves that way, or make money”. Well, if that is what you want to do, then pay taxes! A religious school is tax-exempt because it is religious, but if it is functioning as a hotel, then it should pay taxes just like its neighbor. Otherwise it is not fair business.

In this answer, Pope Francis makes a simple claim about how governments should treat the finances of religious organizations: churches that conduct business should be subject to taxes on their business income. While some early headlines claimed that Pope Francis sought to “end the tax-exempt status of churches that don’t help the needy,” it is clear from the quote above that the Pope made no such statement. Instead, Pope Francis simply expressed his belief that the tax playing field should be even for all businesses, whether operated by religious organizations or not.

Importantly, Pope Francis’s remarks are not entirely applicable to the United States tax system. The Pope drew specific attention to religious orders in Europe that rent out their extra space to overnight guests for a profit. However, in the United States, a church that operated a hotel would likely be subject to the Unrelated Business Income Tax, which applies to tax-exempt organizations that conduct business operations that are unrelated to their tax-exempt purpose. So, the Pope would likely be satisfied with current U.S. law, which requires church-operated businesses to pay taxes on their profits (with a few notable exceptions).

Pope Francis’s remarks come in the midst of an extended public debate about the tax status of churches in the United States. Because of the difficulty of determining what counts as a religion, the federal government has traditionally applied a relatively loose set of standards when deciding whether to grant tax-exempt status to a religious organization. In recent months, these standards have come under criticism from figures such as writer Mark Oppenheimer and comedian John Oliver.

This is not the first time Pope Francis has commented on tax-related issues since his papacy began. In a homily delivered in February, the Pope said that not paying one’s taxes is a “very grave sin.”

Was this page helpful to you?


Thank You!

The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?

Contribute to the Tax Foundation


Related Articles