Catholic Tax Boon

The Catholic church in Germany had a bumper year in 2006. According to recent estimates, the 27 dioceses on average took in some eight percent more when compared to 2005. Financial experts for the church expect that revenue for 2007 could amount to 4.5 billion euros ($6 billion) -- 500 million euros more than two years ago.

Germany has a system of ecclesiastical financing unique to only a few European countries. Germany's 28 million Catholics -- along with other members of state-recognized religions -- are obligated to pay their churches a tax of between 8 percent and 9 percent, depending on where they live.

The federal tax office automatically deducts this from people's monthly pay packets every month, with the result that Germany's churches are among the richest in the world.

Catholics leaving in droves

Despite this comfortable tax arrangement, the last few years haven't been too kind to the Catholic church.

Between 2000 and 2005, more than 680,000 people officially registered to leave the church and free themselves from their tax obligations (and their right to receive the sacraments at the same time). In addition, Germany's sluggish economy with its high unemployment rates and lower wages meant there was even less money available to tax.

But now, things are looking up because the levy, the church's biggest single source of income, is back up to levels not seen since 1998.

According to Sebastian Anneser, the financial director of the Catholic Archdiocese of Munich and Freising, a key reason for this "surprising" development is increasing business confidence and its positive effects on employment.

In his March budget statement, though, Anneser warned the increase "wasn't expected to hold in the long-term" because a combination of low birthrates, aging population and waning interest were causing people to "turn their backs on the church."

However, the church has managed to stem the floodtide somewhat -- the rate at which people are abandoning Catholic pews has fallen sharply in the past few years.

German in the Vatican

While there have been some suggestions that this is because a German now sits on the papal chair, the Catholic church itself is hesitant to make this connection.

"Curiosity about the Catholic church and religion has definitely increased because of (Joseph) Ratzinger becoming pope in 2005 as well as the death of Pope John Paul II," said Adelheid Utters-Adam, a spokesperson for the Munich archdiocese in Ratzinger's home state of Bavaria.

"But there was a significant fall in the rate of people leaving in 2004 and that definitely doesn't have anything to do with the current pope," Utters-Adam said.

In fact, according to some, having a German sitting in the papal chair could actually be a liability for Germany's Catholic church.

"Every time (Pope Benedict) has visited Bavaria, there has been a dramatic rise in the number of departures from the church," said Carsten Frerk, a sociologist who researches religious institutions.

The last papal visit cost 30 million euros.

"That annoyed many people who thought the money could have otherwise been better spent on social projects instead of a media spectacle," Frerk said.

Back to the collection plate?

According to Frerk, it's not just the church which is becoming increasingly unpopular, it's also the church tax system.

"Polls show that around 60 percent of people are against collecting the tax in this way -- they would prefer to donate voluntarily," Frerk said. Interestingly though, only a third of those surveyed "knew exactly how much church tax they paid," he said.

"That's the ingenious thing about the system -- the tax is just deducted automatically," he said.

Thirty five-year-old teacher Marion Corpus decided to cancel her church contributions four years ago. She said it wasn't until she got a new job that came with an easier to read pay slip that she realized for the first time how much cash she was giving the church.

"It was about 80 euros a month," Corpus said. "I thought I could do something better with the money because I didn't like what the church was doing. Instead, I've now got a monthly membership to Amnesty International plus I sponsor a child in Malawi."

Despite the system's unpopularity, the right of recognized churches to tax its adherents is enshrined in the German constitution. The government only collects the levy because churches contract it to do so. But this arrangement is unlikely to change any time soon -- after all, the state gets to keep three percent of the all money it amasses through the church tax.