Italian church prays tax breaks pass EU scrutiny

ITALY: "Catholicism in Italy is a profound, deeply rooted, popular phenomenon

ITALY:"Catholicism in Italy is a profound, deeply rooted, popular phenomenon. Whoever opts to criticise Catholicism risks distancing themselves from a fundamental element in this country's identity."

Who is the above speaker? A Vatican secretary of state, a senior Italian bishop or the "lay cardinal", seven times prime minister Giulio Andreotti? No, the man to offer those words of solidarity to the Italian church was the deputy prime minister, Francesco Rutelli, one-time radical and Green politician.

Rutelli is just one of many centre-left politicians who have spoken out in recent days in defence of the church, just one of many who opted to attend Pope Benedict's young people's day at the Italian marina shrine of Loreto last weekend.

The fact that more than half a million young people turned out at Loreto on Sunday prompted senior centre-left figure Pierluigi Castagnetti of La Margherita to comment: "Such a huge gathering of young people as that which we see here today has a lot of things to say to politics, to a political class that simply does not attract the interest of kids."

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Clearly, the Catholic Church in Italy still moves a lot of votes. Clearly, too, some centre-left figures have been ultra keen not to be labelled as the "bad boys" in the wake of the decision last week by the European Union's competition commissioner to look into the legitimacy of those tax breaks offered to the church by the Italian state.

Put simply, the Catholic Church in Italy is exempt from payment of a variety of property and income taxes, thanks to various agreements made with the state. If a building is used as a place of worship, it is exempt from tax even if other parts of the same building have other uses.

If the church owned just the odd building, such fiscal concerns might seem out of place. The problem, of course, is that in Italy the Catholic Church is a major real estate player. Turin daily La Stampa last week estimated the church controls, directly or indirectly, 20 per cent of Italy's real estate market.

This means 135 universities, 6,228 kindergartens, 1,280 primary schools, 1,136 secondary schools, 2,300 museums and libraries, 121 hospitals, 504 seminaries, 1,000 monasteries and convents, 36,000 churches, and much else besides. The church's real estate "empire" may be worth up to €9 billion, while its annual tax exemptions, in property rates alone, could reach €2.2 million.

Such figures and such a patrimony inevitably attract attention, with the European Commission issuing a formal request for information about the church's fiscal position last January. It wants to satisfy itself that the tax breaks, with regard to those church entities that conduct some form of commercial activity, do not constitute illegal state aid.

For the time being, though, the church does not seem worried, with Italian Bishops Conference president Archbishop Angelo Bagnasco commenting last week: "[The EU] has to acknowledge clearly the constant works done over the centuries by the church in favour of the poorest and the weakest, making both human and economic resources available to them, resources that come from the Christian community."