Will the Vatican ever pay Israel taxes due?

• Author: DAVID S. LEVINE
• Published date: 09 October 2021
• Publication title: Jerusalem Post, The: Web Edition Articles (Israel)

The modern State of Israel was internationally recognized by the UN in 1948. It took 45 years for the Holy See finally to recognize Israel in December 1993. Regardless, the Catholic Church (like everyone else) is subject to the laws of the country it operates in. And it should be matching its actions with their own teachings: According to the New Testament, Jesus said one should "Render unto Caesar the things that are Caesar's" (Mark 12:17 and Luke 20:25) and "Pay everyone what you owe him: taxes to whom taxes are due, revenue to whom revenue is due, respect to whom respect is due, honor to whom honor is due" (Romans 13:7).

However, ever since the creation of the State of Israel, the Catholic and other Christian churches have refused to pay taxes due Israel and its municipalities on church-owned properties and income. In 2002, the Knesset canceled certain tax exemptions to religious institutions (of any denomination) that offer health, hospitality, and welfare services (with the exception of houses of prayer like synagogues, churches, and convents), ritual baths, and educational institutions that are not commercial activities. [For a more detailed historical perspective and legal discussion, see Dr. Michael A. Calvo, Begin-Sadat Center for Strategic Studies, Israel and the Holy See, paper #2,127 dated August 27, 2021].

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While it may seem reasonable that houses of prayer, ritual baths, and educational institutions be exempt from taxes, it is against internationally accepted rules of fair competition to exempt from taxes: hotels, stores, restaurants, hostels, guest houses, hospitals, welfare services, and leases of apartments belonging to churches. They operate like regular commercial businesses. They are classified as unrelated business activities and should therefore, be subject to taxes. Churches, mosques and synagogues are required to pay taxes in Israel on the profits made in Israel by their schools, hotels, hostels, hospitals. Furthermore, they are taxed on properties that are not places of prayer.

IN DECEMBER 2017, the Jerusalem Municipality asked for payment of unpaid commercial taxes amounting to NIS 650 million (about $186 million) and froze church bank accounts. In response, the Church of the Holy Sepulcher and other churches demonized Israel, going so far as to imply that Jerusalem does not belong to the Jewish...