Pastors getting fabulously rich off untaxed ‘invisible benefits’

Posted on : 2015-08-28 16:22 KST Modified on : 2019-10-19 20:29 KST
Some churches resisting the administration’s plans to tax religious income, even as pastors receive extravagant retirement packages

#1. In 2013, a head pastor at a Seoul-area church received a “farewell package” consisting of a church-owned apartment valued at over 700 million won (US$594,300), severance pay of 300 million won (US$254,700), a car worth 50 million won (US$42,400), and a year’s worth of apartment and car maintenance payments. In all, the retiring pastor received well over double the church’s yearly earnings of 500 million to 600 million won (US$424,400-509,400). He also received lifetime monthly payments equal to 80% of his honorarium as head pastor.

#2. Controversy has erupted at a Gyeonggi Province church over parting gifts to another head pastor who is retiring at the end of the year. They include a church-owned apartment worth over 800 million won (US$679,200) and 700 million won in severance pay. Annual revenue for the church, which has a congregation of around 500, are estimated at 500 million to 600 million won. The tax-free farewell package is nearly three times bigger. Plans are also reportedly being considered for a monthly payment of six million won (US$5,100) for once-a-week sermons by the pastor after his retirement.

#3. After being caught in an adulterous relationship with a congregation member, a head pastor at another Gyeonggi church held out for a farewell package of 570 million won (US$483,900) before stepping down. The church in question has a flock of around 150.

With Protestant churches up in arms over the administration’s recent plans to tax religious income, many are saying the taxing of “invisible benefits” from churches to high-earning pastors and their family members should also be considered.

In the South Korean Protestant community, churches are classified as “medium-sized” when their ordinary congregation size is over 1,500, and “large” when between 3,000 to 5,000. The head pastor at one medium-sized Seoul church received church assistance for his apartment and its monthly maintenance expenses of 600,000 won (US$510), as well as his car, gas, communications, corporate card, and even his children’s tuition. While churches differ in the financial benefits they grant their pastors, some medium and large churches reportedly offer more in benefits than that one.

The support for pastors dates back to the days of more straitened circumstances, when congregation members would voluntarily give contributions and donations to support them and their family members. The “farewell package” is said to have had the original aim of helping pastors find their own homes after living on church property and departing without severance pay.

In a recent letter to Minister of Strategy and Planning Choi Kyoung-hwan, the National Council of Churches in Korea (NCCK) said it welcomed the government’s plan for taxing religious workers, citing the “taxpayer’s obligation.” The Christian Council of Korea (CCK), in contrast, said it was “opposed to legally instituting taxation of religious workers,” arguing that churches should “pay voluntarily rather than being legally forced.”

“Neither the administration nor the National Assembly should be pressured into hasty conclusions by a public mood that makes it seem as though religious workers are enjoying special treatment,” argued CCK general manager Yoon Duck-nam.

“Large churches are currently paying taxes voluntarily,” Yoon added.

Protestant figures who support the taxation plan say the arguments opposing the “unjust taxing of religious calling and dedication” are actually based more in the pastors’ hopes that their real incomes and perks remain a secret.

"There isn’t a single pastor at a medium-sized church today who doesn’t get a salary,” said Withplus Community Church pastor Lee Jin-oh on Aug. 27. “They should be transparent about reporting their allowances and benefits along with their incomes.”

According to Lee, pastors at medium-sized churches typically make more than 100 million won (US$84,900) a year.

“If the taxing of religious workers made income reporting mandatory and people found out their real incomes, many people in society would be asking, ‘Should pastors really be making that much?’” he said.

According to an analysis by a taxpayers‘ rights group, a religious worker earning 80 million won (US$67,900) a year would only pay 1.25 million won (US$1,060) in income tax, even with the Income Tax Act amendment announced by the administration. A company employee earning the same salary would have to pay 7.17 million won (US$6,090) - 5.8 times as much.

“When pastors at medium-sized churches don’t pay an earned income tax on all the benefits and farewell packages they receive from the church besides their pay, it can give the impression that they’re not fulfilling their responsibility as members of the community,” said Kim Ae-hee, secretary-general of the Korean Christian Alliance for Church Reform.

“That becomes a reason for the declining trust in churches,” Kim added.

Some are also discussing the possibility of taxing other off-the-books earnings for pastors, including “thank-you gifts” and wedding and funeral officiating fees.

“Even if religious workers are taxed, there’s no way to tax the various hidden perks without voluntary reporting,” noted Kim Jin-ho, chief of research at the Christian Institute for The Third Era.

Indeed, this fact has many calling transparent disclosure of all church finances a chief priority.

“The first thing we need is disclosure of the finances for these medium-sized churches,” Kim said.

By Kim Kyu-nam, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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