According to yesterday’s news, the Church lost an appeal in the European Court of Human Rights and, as a result, will have to pay property taxes on the Preston, England temple.
Of course, the decision raises a number of questions, not the least of which is how a property tax dispute gets to the European Court of Human Rights in the first place. Other fair questions include whether this evinces European prejudice against the Mormon church and what ramifications this decision will have for the Church.
As a public service, I read the ECHR decision and the two British decisions that preceded it, and will try to explain what happened.
A quick pair of caveats: first, I’m not a UK solicitor; I don’t know the nuances of British law. Second, although I’m a tax person, I’m more an income tax person than a property tax person. And, with those two caveats firmly in mind, let’s go:
What’s at issue here?
The Preston temple complex houses not only the temple, but “a stake center, missionary training center, family history center, distribution center, patron housing facility, and temple missionary accommodations.”
The British government asserted that the Church owed property tax on all of these buildings except the stake center. Why would the stake center be exempt and not the rest of the buildings? Under the Local Government Finance Act of 1988, property tax applies at three potential rates. Most property is, presumably, subject to the ordinary property tax. Property used for charitable purposes is taxable at a much lower rate (20% of the ordinary rate). And property used “for the conduct of public religious worship” is exempt from property tax.
There was no dispute that that stake center was used for public religious worship. The rest of the buildings, the government held, were not.
The courts actually spent some time dealing with the non-temple buildings, ultimately holding that, though owned by the Church, they weren’t used for worship and, as such, were subject to the lower property tax rate.
But the temple’s clearly used for worship.
And the courts agreed. But, they said, it wasn’t “public worship.” The property tax exemption was intended to provide a public benefit, and that public benefit required public access. Because access to the temple is limited to members of the Church–and not even all of them–permitting the temple to be exempt from the property tax would contravene the policy underlying the exemption.
Why the ECHR?
The Church alleged that this differential treatment of the temple violated Articles 9 and 14 of the Convention for the Protection of Human Rights and Fundamental Freedoms, which guarantee the right to religious freedom and to be free from discrimination.
The Church argued that, by not exempting the temple from property taxation, the UK government imposed a tax burden not imposed on other religious structures, and this implicit discrimination acted prejudicially against the Church.
The ECHR found that the tax was not intended to address the legitimacy of Mormon belief and practice; moreover, it was neutral as applied. Any Mormon building that permitted public worship was exempt, while private churches of other denominations–including of the Church of England!–were subject to the reduced rates of taxation.
And, the court held, the low rate of taxation that would be imposed on the temple would not hinder the ability of the Church to worship.
So is the Church no longer tax-exempt in the UK?
The Church is still clearly tax-exempt in the UK. This dispute was over property tax, not income tax. The sole question was whether the Church would have to pay property tax on the Preston temple. Note that these decisions implicitly reinforce the charitable status of the Church–as a result of that status, the temple is taxed at a significantly-reduced rate.
Could the Church have somehow avoided paying tax on the temple?
Probably not. The language of the 1988 Act is pretty clear, and I think the ECHR is right that this doesn’t substantively impede our ability to worship, and I haven’t seen any evidence that the change was inspired by anti-Mormon animus. Unless we were to allow public access to our temples–a move I both don’t expect and don’t see as optimal–or the UK changes its property tax law, our British temples will be subject to property tax
What if we made like one room in the temple available to everyone? A waiting room or something?
The 2008 decision indicates that the tax can be apportioned according to the amount of access. If that’s right, then I suspect granting limited access wouldn’t do a lot to help. The temple, according to the decisions, has an internal area of about 6,300 square meters. If the waiting room were 630 square meters, then 10% of the temple would be exempt from property tax. That would, I suppose, provide some savings, but it wouldn’t be a substantive amount.[fn1]
Will this establish a harmful precedent in Europe? That is, will every country start imposing a property tax on our temples?
Maybe, though I’m skeptical. The ECHR cared that the property tax (a) was generally applicable, and (b) was not motivated by a desire to get the Mormon church. I don’t know its process well, but I suspect that, if a country changed its property tax specifically to tax Mormon temples, the outcome would have been different.
Still, couldn’t this be the result of anti-Mormon animus?
Certainly. But I don’t think it is. The opinions are written carefully and professionally, and don’t focus on any peculiarity of Mormon practice. Instead, they carefully parse the law and come to a perfectly reasonable–and almost certainly correct–conclusion.
I bet the Church is unhappy about this, though.
It’s going to cost the Church money, clearly. But the Church’s response is, in my opinion, perfect:
The Church of Jesus Christ of Latter-day Saints respects the decision of the Strasbourg court, and is grateful that the charitable activities of churches are recognized under UK and European law
—
[fn1] I’m sure, of course, that there is some wiggle-room here; I’m entirely sure (or, at least, as a practical matter I assume) that a church doesn’t lose its property tax exemption if the public doesn’t have access to its administrative offices, for example. But where 90% of the building is inaccessible, I suspect that you wouldn’t get a full exemption.
By Common Consent, a Mormon Blog 
I’m not sure why churches should be exempt from property tax in the first place, as is usually the case in the US. They require fire and police protection and create traffic on local streets.
Very informative and useful post — thank you so much for putting this together.
Other fair questions include whether this evinces European prejudice against the Mormon church and what ramifications this decision will have for the Church.
There will be many who raise this as a concern and assert that this outcome does, indeed, reveal European animus against the Church or some kind of general anti-religion bias or a direct threat to “religious freedom”. I do not believe this is the case.
In fact, the Church’s most recent experience in the European Court of Human Rights before this, in the case of Obst v. Germany, was a resounding success for the Church’s autonomy in holding employees to the requirements of the temple recommend for purposes of continued employment. In Obst, the petitioner had claimed in the ECHR that Germany had violated Article 8 (right to respect for private and family life) of the European Convention on Human Rights when Germany’s Federal Constitutional Court had ruled in favor of the Church in finding that the Church, as Obst’s employer, had not violated Obst’s constitutional and labor law rights by firing him without notice when he confessed to committing adultery. (And, at the same time, the Catholic Church lost a similar, parallel case, Schüth v. Germany — so if this is one’s standard for a showing of “prejudice” against a particular religion, then based on the 2010 cases, the ECHR showed prejudice in favor of our Church and against the Catholic Church.)
Also, in Obst v. Germany, the Church had argued in its brief that the ECHR would signal an “important strengthening” of religious freedom by siding with the Church on the issue of its freedom to fire an employee for committing adultery because it violated the temple recommend, compliance with which had been made a condition of the fired employee’s continued employment. In siding with the Church on this issue of internal autonomy to regulate its own affairs including using the temple recommend as conditions for employment, therefore, the ECHR’s decision was just what the Church had wanted: an “important strengthening” of religious freedom.
The Preston temple case does not reveal European animus against the Church; instead, the analysis is as you’ve laid out in the original post, Sam — if one is willing to step back and look at the issues rationally, one can see why the courts to have considered this Preston temple case have unanimously held the way they have without needing to look for anti-Mormon animus behind the rulings.
The language of the 1988 Act is pretty clear, and I think the ECHR is right that this doesn’t substantively impede our ability to worship, and I haven’t seen any evidence that the change was inspired by anti-Mormon animus.
The 1988 “change” you refer to wasn’t a large change at all — it was consistent with long-standing public policy relating to the charitable activities and taxation of religious entities in the United Kingdom. And the UK courts up to and including the House of Lords — and now this ECHR decision reviewing those UK court decisions — interpreted the 1988 Statute consistently with the House of Lord’s precedential ruling in the 1963 case relating to the taxation of our London temple. From the Encyclopedia of Mormonism:
In other words, the principle of stare decisis (to use common law terminology that still controls in the US and that I believe is still current in the UK as well) weighed heavily against the Church from the beginning of this case, since the House of Lords had already ruled on the issue in 1963 relating to the London temple. In the US, that would be like bringing suit relating to an issue on which the Supreme Court had already directly ruled, under very similar if not identical facts, and against the same party.
Thanks for the very useful rundown.
John, thanks for the additional context. The British decisions were clear that they were bound by the London temple decision; I’m not sure what changed in 2001 to prompt the Church’s request that the Preston temple be exempt.
The ECHR found that the tax was not intended to address the legitimacy of Mormon belief and practice; moreover, it was neutral as applied. Any Mormon building that permitted public worship was exempt, while private churches of other denominations–including of the Church of England!–were subject to the reduced rates of taxation.
This is such a key part of your analysis — just wanted to reemphasize it here.
Also, this: Note that these decisions implicitly reinforce the charitable status of the Church — as a result of that status, the temple is taxed at a significantly-reduced rate.
This will be important to keep in mind as we begin to hear a chorus of Mormons claiming that this ECHR decision and the UK court decisions represent a threat to religious freedom and/or specific prejudice against the Church.
Yes, I don’t know why the Church thought they could succeed this time such that they made this attempt.
I doubt the church could receive a partial exemption for a temple waiting room being open to the public, because I can’t see anyone putting forth the argument that the purpose of the waiting room itself is public worship.
Someone on another board mentioned hearing that this ruling applies only to the Preston Temple. Is there any reason the 20% rule wouldn’t apply to the London temple as well?
Interesting stuff, thanks Sam. An 80% discount on the property tax rate for the non-public buildings isn’t too shabby.
An 80% discount on the property tax rate for the non-public buildings isn’t too shabby.
Exactly.
John f,
I’m also baffled as to why the church was contesting this, and went so far as the European court. I think our British law is very reasonable in this respect. And I have some concern as to what the public perception will be that the case was brought at all, insofar as the public pays any attention to these cases. But it did make national news.
Yeah, sounds like a fair decision to me. Can’t blame the church for trying, but they deserved to lose.
By the way, the ECHR very respectfully summarized the requirements of the temple recommend (which sets the standard for “worthiness” that makes temple attendance an exclusive matter and therefore the temple not a place “public worship”):
We all know how easy it would be for an outside party to portray our temple recommend requirements as insular, controlling, and/or cultish. By contrast, this summary is actually respectful.
Thanks for this post, Sam. It’s very helpful in clarifying a case that has generated a lot of nonsense comments around the web. It’s amazing what happens when you look at the actual law involved. Nicely done.
Yeah, john, all around, I thought it was really respectful and careful. None of the opinions did anything to try to make Mormon practice sound weird, and none imputed any bad motive to, e.g., temple requirements.
Does anyone have a good idea why the church took this to court? It seems open and shut against the church. Was the church looking for something from this legal decision that would set a favorable precedent in the future?
I think that there are two good arguments that the church could have made (and I haven’t read the decisions so I don’t know whether they raised them both), and therefore I think that the case is not open and shut.
The first is the argument that the church did make–that the public in fact derives benefit from the worship that does occur in the temple, even though not every member of the public attends the temple, just as, presumably, the public derives benefit from people worshiping in other churches, notwithstanding that most people don’t attend there either.
The second is an argument about what “public” means. Sam quotes the ECHR’s reference to private chapels in the Church of England, which are treated similarly for tax purposes. But those are private in a way that the temples are not. To worship at the private chapel at Blenheim, for instance (assuming there is one), you’d presumably have to receive an invitation from the Duke of Marlborough, or be a member of his family. Failing that, you and every other member of the public are not permitted to worship there. In contrast, the entire public is invited to worship at our temples–they need only meet the qualifications of membership and worthiness and they’ll happily be welcomed inside.
It’s only the public’s lack of interest in meeting those qualifications that bars their entry, then, much as my lack of interest in a Jehovah’s Witness worship service effectively precludes my entry into the local Kingdom Hall.
Seen that way, the only difference is that an interested non-believer can walk into a Kingdom Hall tomorrow, whereas an interested non-believer has to wait a bit longer (and become a believer along the way) in order to enter the temple. Is that a sufficient distinction to change the temple from being a public to a private house of worship?
Good overview. I like the Q and A format.
Very interesting run down. I really appreciate you doing this write up.
I am wondering if this tax business has anything to do with the fact that despite the membership in the UK there are only 2 Temples. I have long hoped for one in Scotland or even another in the middle of England like Birmingham
“Is that a sufficient distinction to change the temple from being a public to a private house of worship?”
Yes
Mark, the Church certainly appears to have raised the issue that temple worship provides a public benefit; the courts, though, essentially held that Parliament was within its authority to require public admittance to a religious building for that building to qualify for the zero rate. And, though anybody who chooses to qualify can enter the temple, there is a substantive difference between your example of disinterest in going into a Kingdom Hall and going to the temple. Were you interested, you could attend Jehovah’s Witness meetings (afaik–if I’m wrong about that, the Kingdom Hall wouldn’t merit the tax exemption). An Anglican is not, however, prevented from entering the temple merely by lack of interest; rather, entrance is limited to a subset of qualifying persons. This doesn’t strike me as an unreasonable interpretation of “public worship.”
And it’s an even more reasonable interpretation given the 40+-year-old precedent dealing with the London temple, as john f. points out.
Was the suit, then, frivolous? I clearly don’t have any inside information but, digging a little, I think I understand the change that motivated it. The change was the Human Rights Act of 1998, which went into effect in October 2000. Essentially, the 1998 Act codified into British law the provisions of the ECHR. Given that the Church requested that the temple be exempted in 2001, and given that it made a religious freedom argument, I suspect the Church felt that the 1998 Act created a substantive change, and that the precedent should be rethought in light of the legislative change. The courts ended up deciding differently, but I don’t think the Church’s position was frivolous.
Down playing the reduced rate is nice and all, but the reality is the tax might be quite weighty. Value the building, improvements and land at 100million and a reduced tax weight is still pretty massive. It could likely be the equivalent of all fast offerings in the UK, if not more?
The temple is not generating revenue, adds to the surrounding economy, beautifies and preserves the space, and increases surrounding property values and aesthetic. Not including the benefits to the community as a result of moral commitments of the members who go. I understand that’s why the reduced tax would be applied, but the end result would seem to be less temples being built in the UK, perhaps Europe if the rule does spread, even though downplayed here.
It’s clear this is a taste of things to come (or further attempts) for anyone that has actually been paying attention both here and the US. The camel doesn’t start out by putting its body under the tent, but the nose. Justifying, and winning legal president for small rates clearly opens the door for increased rates.
Not saying the sky is falling, but I think the potential ramifications are greater than presented in this post.
If I’m understanding it right, the rates don’t look too severe. In London it’s only 47.5% of the open market rental value of the property.
http://www.2010.voa.gov.uk/rli/static/HelpPages/English/faqs/faq146-what_are_the_current_multipliers.html
I hope I’m wrong, or that they have a really low ball approach to determining rental value…
DQ, the taxes on the London Temple don’t appear to have prevented the building of the Preston Temple.
Sam, I like your analysis, and you may be right about the Human Rights legislation being the catalyst for the case being brought. But timing-wise, in a poor economic climate, when the public have been complaining about tax avoidance by large corporations, I don’t think it helps public perception of religion in general, or the church in particular.
There is something similar happening in Australia. None of the wards have any money in their budgets for anythin. Nothing has been said over the pulpit but a friend in public affairs says we have joined with some other churches to defend our tax exempt status, because we do very little charitable work outside our own congregations on a church organised basis.
At one time tithing was 100% tax deductable, that was reduced to 75% because the church did not comply with some requirement. If the church looses it’s exempt status, the tax deduction for tithing could also go.
The 12th Article of Faith is instructive here IMO “We believe in being subject to kings, presidents, rulers, and magistrates, in obeying, honoring, and sustaining the law.”
The law sets forth property taxation requirements which the temple clearly does not qualify for given the very exclusive and non-public nature of the structure.
I guess the church has extra lawyers around to make a run at all these thing, but why oh why did they think that this was a winnable argument on those grounds is beyond me.
Sam, thanks for doing the leg work here. This has been very helpful.
Jeff, part of sustaining the law is the appeals process. The appeals process certainly legitimizes and strengthens the legal system. It’s like saying if you believe in sustaining the law, when charged with a crime you shouldn’t have a lawyer because the rules and magistrates have declared your actions illegal and you should just comply without contrary to that declaration. The churches PR quote clearly displays the church will honor the law, but that doesn’t mean using its legal and protected right to appeal is an act of dishonor.
By really, I’m surprised in all this discussion I’m the only one who wonders at the actual cost? The tax laws seem someone obtuse to an outsider, so I’ll just assume that the church is liable to pay 20% of 47%, which works out surprisingly to around 10% of its market value rental rate on the temple?
Incidentally, that (full value) tax rate if applied to my house (using low ball estimated rental rates) would be 10 times what I pay in the US. By I’m no authority on this. What is the actual tax liability here?
DQ, it should be possible to discover the rateable value of both temples on line (property taxes are based on rateable value, though I am not at this juncture sure how they then convert to an actual figure for tax, and don’t have time to look into it now, but may attempt it later).
DQ – I agree that the appeals process is part of sustaining the law.. My concern is that rulings like this can be used to fan the flames of religious intolerance which is clearly not evidenced in this case. Yes, I know what the official statement was, but what is the impression that will be received all around the world? That is my concern. The church sought tax relief IMO knowing that it was a crap shoot at best, but maybe the ‘persecuted religion’ angle is what they were after as that seems a very likely outcome.
It is all unfortunate and IMO unnecessary.
DQ, I’m not sure what the current liability would be, but in the FYE 2000, the Church paid £117,360 in taxes on the Preston temple site. Of course, that includes all of the buildings there except the stake center, and that was, I assume, at the 20% level. But I don’t know what has happened to property values–or, for that matter, to property tax rates–in the ensuing decade and a half.
jeffc, like I said in the comments above, there appears to have been a substantive change in law in the UK shortly before filing these various appeals. Though the Church ultimately lost, and though I think the courts came to the correct decision (based on my inexpert reading of the statute in question), this conclusion was not ex ante a foregone conclusion. The Church, like any other actor, needs to validate its rights; fwiw, none of the judges, in their opinions, treat this case as an annoyance or as wrongfully-filed. Rather, they address the merits and come to their conclusions.
Two responses to DQ:
First with regard to you statement “The camel doesn’t start out by putting its body under the tent, but the nose. Justifying, and winning legal president for small rates clearly opens the door for increased rates.” The camel’s nose entered the tent in 1963. 50 years later, it remains exactly where it was then. We tried to expel it and failed–big deal.
As for the tax burden, I suspect you are confusing the rental rate with market value. In the United States, I can rent my house for roughly 4.5% of its market value (you can download the relevant data <a href="http://www.lincolninst.edu/subcenters/land-values/rent-price-ratio.asp" here.) Say that ratio holds for nonresidential property in the UK. The 47% tax rate would apply to the rental rate–the equivalent tax rate on market value would be approximately 2.1%, which is not at all out of line with American property tax rates. The 80% exemption for charitable properties would take that down to 0.4%. If your guess at a $100 million market value is correct, the annual tax burden would be about $400,000, which is a little over $2 per UK member. I think they’ll manage.
Sam or John,
Are private universities and colleges taxed at the charitable 20% rate, too? Even if discounted 80% the property tax on a large university campus would be enormous.
Sam: I don’t disagree that the court’s interpretation of “public worship” seems logical. But of course the course of the law has not been logic, but experience. And it would be instructive to know what experience, if any, the English courts have had in interpreting “public worship.” (Probably not much, is my guess.)
It seems, though, that there is a spectrum of openness that begins with the ordinary parish church, open to all at nearly all times of day and night, and ends at the private chapel at Blenheim, open only to the Duke, his family and their invited guests. As an advocate, I would try to push the temple closer to the parish church end of that spectrum and away from the private chapel end. A winning argument? Not this time, it appears, and not 50 years ago in the London Temple case–if in fact the argument was made.
By the way, for a more extensive analysis from an English blogger, keep your eyes on this page. He promises a fuller analysis when he’s had a chance to better digest the opinion.
Mark, I’ve been told that there’s a long line of “public worship” cases, dating back at least to the 1962 decision dealing with the London temple. Unfortunately, I don’t have access to any British databases of decisions, and that original decision isn’t available on publicly-Google-able sites, so I can’t look at the history of British courts’ use and interpretation over time of “public worship.”
Thanks, Sam.
We can hope that Mr Cranmer will give us some details about those cases (with links!) on his blog.
Things change but, until I left the UK twenty years ago (before the Preston Temple had been built), marriages could not be solemnised (I kid you not!) under English law in the London Temple. Couples, like my wife and I in 1970, had first to be civilly married before going to the Temple to be sealed.
The Church, which preferred that both ceremonies be performed on the same day, allowed a few days’ leeway for those who wanted to be married in their home areas in the presence of family members and friends – who might well not be members of the Church – and who then had to make lengthy journeys to the Temple. The Temple district then extended to Scotland, Wales, Ireland and several European countries. Fail to meet the deadline and you had to wait twelve months before you could be sealed.
Later, as bishop of the Chester Ward, I was authorised by the Registrar-General to register marriages at that meetinghouse only. Couples no longer needed to schedule their weddings so that a local government registrar could attend. As with all Church-owned (as opposed to rented) meetinghouses, the Church’s solicitors (Messrs Devonshires even in the ’70s as I recall) had obtained certification of the building for the solemnisation of marriages.
But first I had to study a handbook published by the Registrar-General and sit down with the Superintendent Registrar in Chester so he could ensure I understood the legal requirements. One requirement was that the doors of the building had to be open during marriages; not literally standing open, but not closed in such a way that any member of the public who wanted to enter or leave would be unable to do so at will. That’s why I understand the Temple did not qualify to receive certification for the solemnisation of marriages.
There were other requirements regarding words legally required to be spoken during the ceremony, and registration standards. I conducted and registered numerous marriages in Chester and, upon my release, arranged for my successor as bishop of the Ward to become the Authorised Person in my stead.
In those days, sessions were at 2 hour or longer intervals, and the doors of the London Temple were normally kept closed and locked. Recommend holders had to ring the doorbell and someone would come and let them in. No open door with a permanently-staffed recommend desk as the only apparent barrier to entry.
When my new wife and I arrived at 9 pm on the Saturday before Christmas, following our marriage that morning in Manchester, the Temple was dark, but the president, who was to seal us, and our witnesses were patiently waiting inside. After admitting us, the president locked the door and we all went upstairs. No-one would have been able to get in after that even if they had a recommend; there was no-one else in the building.
The philosophy underlying the Marriage Act 1949 and the Local Government Finance Act 1988 regarding places of public religious worship is the same. Whether you want exemption from rates or council tax or whatever it is called in England and Wales these days, or to be able to solemnise a marriage, members of the general public have to be able to wander in and out as they wish. (Good luck if you wanted to crash Will’s and Kate’s little do at Westminster Abbey, of course!)
Perhaps this also explains why I have no difficulty seeing legal marriage and sealing as two entirely separate things.
Thanks for the history and experience, Roger.
There are plenty of countries in which civil marriage can’t happen in the temple; Brazilians I knew faced the same constraints (with the same ~1-week window to go to the temple after the civil ceremony).
Couples, like my wife and I in 1970, had first to be civilly married before going to the Temple to be sealed.
That’s how it is in virtually every country except the United States. We are the outliers on this issue.
Last Lemming,
Most states AND counties in the US are below 1%. Some quite significantly below 1%. I compared my rental rate and my property tax rate, based on the 47% figure I’d be paying 10x more if we were taxed like the UK on property. But that’s neither here nor there.
What’s interesting is that 200-400k would be seen as “reasonable” by anyone in their right mind for a tax on a property that doesn’t really generate revenue. Dividing the costs among membership is certainly one way to do it, and as long as tax laws are as burdensome as they are the church might as well ask members to donate an additional 2bucks per member toward the temple tax.
What’s interesting to me is if we look at 150 temples and consider a 200k tax rate, that would be $30million in property tax just on the temple alone (let’s remember how many people want to tax churches for all their property).
A recent article claims the church says LDS charities contributed $84million in “assistance” last year. I wonder if that figure is straight cash or goods as well. Anyway, the point being, if the church, for whatever reason, feels it can only spend $84million charity in a given year, $20-30million in new taxes would certainly put a damper on its worldwide operations.
And yes, I am making the principled assumptions that if something is considered “just” in the UK, we should consider how just it would be if carried over world wide. We can certainly make the case that the UK is different because they have high costs to pay for the generous benefits (some might say flaxen cords). But that’s again besides the point.
200-400k in taxes paid to UK either means more money from the members or less money spent on direct assistance or improvements. The church isn’t generating additional revenue to pay for these taxes.