$165 Million in Church Tax Debts: Brazil’s President Vetoes a Pardon but Urges Congress to Override Him

• A Brazilian bill would have forgiven at least $165 million in church tax debts
• It was proposed by a congressman whose father’s church owed about $27 million
• President Bolsonaro vetoed it on legal grounds but urged Congress to override
• Catholic bishops said they had no part in drafting the bill

Brazil’s churches are largely exempt from tax under the constitution, unless they make a profit. A bill passed by Congress in 2020 went further, forgiving church tax debts estimated by Crux at a minimum of $165 million, most of them owed by evangelical churches. In September, President Jair Bolsonaro partially vetoed it.

The measure was proposed by Congressman David Soares, the son of Romildo Soares, founder of the International Grace of God Church, which Crux reported owed about $27 million in taxes. The revenue service had found that some churches were paying dividends and attendance-based bonuses to staff without paying the taxes owed on them.

Bolsonaro’s government cited “unavoidable juridical obstacles”, warning that signing the pardon could amount to a “crime of responsibility” by the president. At the same time, he declared his support for the “non-taxation of temples of any religion” and called on Congress to override his own veto, which the evangelical bloc said it had the votes to do.

The Catholic bishops’ conference kept its distance, saying the Catholic Church took no part in drafting or promoting the bill. Francisco Julho de Souza, a former treasurer of the conference, was blunt: “If a church has a large tax debt, it’s probably involved in commercial initiatives. I don’t see why it shouldn’t pay taxes in a situation like that.” The conference’s secretary-general, Bishop Joel Amado, noted that the revenue service had been “historically hostile to economic activities carried out by churches.”

The Brazilian debate turns on the same distinction that Jamaica’s own discussions of church tax relief keep returning to: the difference between a place of worship and a church that also runs businesses. Exemptions for sanctuaries are widely accepted, but blanket forgiveness of debts built up on commercial activity is harder to justify to ordinary taxpayers. Jamaican churches that want to keep their property tax relief secure are best served by keeping worship, charity and business clearly separated in their accounts and their land holdings.

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