Cutting taxes for the wealthy is the worst possible response to this economic crisis

John Quiggin, The University of Queensland

Australia’s response to the health and economic impacts of the COVID-19 pandemic is rightly considered one of the world’s best. At their best, our federal and state politicians have put aside the sterile games dominating politics for decades.

It seemed possible these efforts might last, as politicians sought to find common ground and make real progress on issues such as climate change, industrial relations and inequality as part of the coronavirus recovery.

But as soon as the virus seemed to be receding, politics returned to the old “normal”. Policies are again being put forward on the basis of ideological reflexes rather than an analysis of the required response to our new situation.

There is no more striking example than the federal government’s reported plan to bring forward income tax cuts legislated for 2024-25. The idea apparently has backbench support.

Those cuts will benefit high-income earners the most. They include replacing the 32.5% marginal tax rate on incomes between A$45,000 and A$120,000, and the 37% rate on incomes between AA$180,000, with a single 30% rate up to A$200,000.

This is being proposed while the government begins to wind back income-support measures, such as free child care, with much more serious “cliffs” fast approaching.

This economic crisis is different

One of the most striking features of Australia’s initial response to COVID-19 was the speed at which the Morrison government abandoned a decade of rhetoric denouncing the Rudd Labor government’s response to the Global Financial Crisis.

In mid-March the government was floating the idea of a tightly limited response with a budget of A$5 billion. By the end of the month this had been abandoned in favour of the JobSeeker and JobKeeper schemes, estimated to cost A$14 billion and A$70 billion respectively. Other schemes brought the total to A$133 billion.

Despite the close resemblance to the Rudd stimulus packages, there was one crucial difference.

The GFC caused a collapse in the availability of credit, potentially choking off consumer demand and private investment. This was the classic case needing demand stimulus.

By contrast, the COVID-19 pandemic caused a shock to the production side of the economy, which flowed through to incomes. Millions of workers in industries such as tourism, hospitality and the arts were no longer able to work because of the virus.

The crucial problem was to support the incomes of those thrown out of work, and keep the businesses employing them afloat until some kind of normality returned. There were problems with the details of eligibility and implementation of the JobSeeker and JobKeeper programs, but the response was essentially right.

Have cash, will buy luxury car

The primary rationale for early tax cuts is that they will stimulate demand. But the economy’s real problem is not inadequate demand – particularly not on the part of high-income earners.

On the contrary, the problem for high-income earners is having a steady income even as many of the things they usually spend on (high-end restaurant meals, interstate and overseas holidays) have become unobtainable.

Among the results has been a splurge on luxury cars. Compared to June 2019, sales of Mazdas, Hyundais, Mitsubishis, Kias, Nissans and Hondas last month were all down. But Mercedes-Benz, BMW, Audi and Lexus were all up.

As Jason Murphy notes, this rush to buy fancy cars isn’t definitive proof the wealthy are looking to ways to spend all the money they’re saving. “But it is suggestive. Eventually the money has to go somewhere.”

The worst possible course of action

The continuing problem with the pandemic is the loss of income faced by millions of workers. By definition, anyone in a position to benefit from a high-end tax cut doesn’t have this problem. Equity would suggest that, far from receiving more income, they should be sharing more of the burden, if not now then in the recovery period.

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Cutting unemployment will require an extra $70 to $90 billion in stimulus. Here’s why

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When the federal government legislated its tax-cut schedule in advance, critics including Reserve Bank governor Philip Lowe and Access Economics partner Chris Richardson pointed out the danger of promising future tax cuts based on projected growth. The same policy had failed ignominiously in the 1990s when the Keating government legislated tax cuts to be introduced after the 1993 election. After declaring the cuts “L-A-W”, Paul Keating was forced to withdraw half of the tax cuts when the budget deteriorated.

These criticisms have now been vindicated.

The decade of strong economic growth, starting this year, that was supposed to make big tax cuts affordable has disappeared. We will be lucky if per capita GDP is back to its 2019 levels by 2024-25, when the tax cuts are slated to kick in regardless of circumstances.

Once that happens, we will need all the tax revenue we can get to bring the budget back into balance and deal with the continuing expenditure needs the pandemic has created.

The government now seems to be headed for the worst possible course of action – cutting support for those hit hardest by the pandemic while pouring money into the bank accounts of the well-off.

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Read more:
Forget JobSeeker. In our post-COVID economy, Australia needs a ‘liveable income guarantee’ instead

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The inevitable result of such a policy will be a surge of personal and business bankruptcies, mortgage defaults and evictions. That will bring about the kind of demand-deficiency recession the tax cuts are supposed to prevent, superimposed on the continuing constraints created by the pandemic.

So far we have all been in this together. For high-income earners that means forgoing tax cuts promised in happier times and contributing more to the relief of those who need it most.

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Post-coronavirus, we’ll need a working tax system, not more taxes and not higher rates

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Neil Warren, UNSW and Richard Highfield, UNSW

Oliver Wendell Holmes Jr famously observed in 1927 that “taxes are what we pay for civilised society, including the chance to insure”.

Whilst tax as a price for civilised society is well understood, less appreciated is the second part of his observation – that tax provides a chance to insure against a crisis.

As nations emerge from the COVID-19 crisis with policies unthinkable just six months ago, and associated debts previously unimaginable, it is becoming clear that while some were well insured and able to respond rapidly, most were underinsured, exposing their civilisations to previously unthinkable risks.

In many ways Australia is an exemplar in its use of taxation to provide the “chance to insure”. It funds Medicare; the Pharmaceuticals Benefit Scheme; the Higher Education Loan Program; the Superannuation Guarantee Charge and contingency-based welfare payments.

COVID has exposed the weakness in our system

COVID-19 has exposed how underinsured Australia is in other ways. It will have to borrow heavily to protect the economy, but for many years won’t be able to impose the extra taxes that will be needed to pay down the debt.

Introducing new taxes or increasing existing tax rates would threaten what will be a fragile recovery.

The only realistic option is to review what Australia gives away, such as tax concessions, and what it fails to collect, as measured by the so-called tax gap.

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Did you cheat on your taxes? Here’s why your days may be numbered

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The tax gap is the difference between the amount the Tax Office collects and what we would have collected if every taxpayer was fully compliant with tax law.

In 2016-17, the Commonwealth raised A$389 billion in taxes, intentionally gave away an estimated $166 billion and unintentionally failed to collect a further $30-35 billion that the Tax Office knows of.

Mapping out a pathway to winding back government debt and funding programs to better insure our civilised society has to begin with ensuring those who are not currently carrying their fair share of the legislated tax burden do so through reforms to reduce non-compliance.

Many of us aren’t paying the tax we should

The Tax Office conservatively estimates that non-compliance for the taxes it has so far examined is equivalent to more than 8% of the tax revenue it collected in 2015-16.

The Treasury also estimates that tax concessions in 2017-18 were equivalent to 41% of Commonwealth government revenue, or more than 9% of GDP (although it cautions against adding estimates together as reducing one concession can affect the use of others).

Given the scale of the Commonwealth response to COVID-19, the government will need additional tax revenues of around 2.5% of GDP (about $50 billion) for some years.

This should not prove insurmountable. In comparison with other advanced economies, Australia is a relative low taxer with a total tax burden of 28.6% of GDP in 2017-18, well below the OECD average of about 34.5%.

There’s revenue going begging

The tax gap estimates show billions can be raised from integrity measures such as addressing overclaimed work-related expenses ($3 billion), unreported cash wages ($1 billion) unreported rental property net income ($2 billion) and unreported business income ($2-3 billion).

There’s much more available from reducing tax concessions, removing the personal tax-free threshold, winding back retirement savings concessions, and broadening the goods and service tax (especially from fully taxing the food that is already partially taxed).

Lower income groups affected by the changes should be compensated by improved targeting of expenditure programs.

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Read more:
Cabinet papers 1998-99: how the GST became unstoppable

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Right now we’ve a near-universal welfare system and a targeted tax system.

The way out of our present problems is to make the tax system more universal and the welfare system more targeted.

New taxes and higher rates should be resisted, especially if made more palatable by more concessions.

What we are proposing would not only result in a tax system that was simpler and harder to escape – but one that was capable of funding the insurance we will need to preserve our society into the future

There’s no reason to think there won’t be another pandemic exposing the weaknesses in our tax system that remain.

Neil Warren, Emeritus Professor of Taxation, UNSW and Richard Highfield, , UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

There isn’t solid research or theory to support cutting corporate taxes to boost wages

Fabrizio Carmignani, Griffith University

The argument that cutting the Australian company tax rate will lead to higher investment and wages, more employment and faster GDP growth does not have solid empirical or theoretical backing.

A close look at the economic research in this area shows a lack of consensus. Different studies, looking at different samples of countries, over different periods of time, reach different conclusions.

And the predictions made by theoretical models are sensitive to the underlying assumptions and structures built into the models themselves.

Many of the issues surrounding tax cuts remain unsettled – such as the size or length of the impact, how it affects inequality and the relationship with other government policies.

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Read more:
Qantas and other big Australian businesses are investing regardless of tax cuts

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The recent International Monetary Fund (IMF) forecast for the American economy highlights some of the issues.

In short, the IMF acknowledges that the recent US tax cuts will have a positive impact on economic growth in 2018-19. However, this is conditional on the US government not cutting expenditure, is likely to be short-lived, and will come at the cost of increased government deficits.

In this light, corporate tax cuts seem to be a long-term pain for a short-term gain, which is probably not what we need in Australia.

Conflicting information

Let’s start with the point that is probably least controversial – that a reduction in the corporate tax rate will lead to an increase in wages.

Think of the output produced by a corporation as a pie. This pie is shared among shareholders (in the form of dividends), banks and other lenders (in the form of interest paid on loans), workers (in the form of wages) and the government (in the form of taxes).

If we reduce the government’s share then there is more for everybody else, including workers. And some data do suggest that wages increase when corporate tax rates decline.

Yet economists disagree on the extent to which wages would actually increase in response to a tax cut.

Some research suggests that this increase might be small, even in a country like Germany, which is often used as an example of the beneficial impact of tax cuts on wages.

Certain aspects of the German economy and industrial relations system make it more likely that German workers will benefit from corporate tax cuts compared to Australian workers.

In Germany, workers’ representatives sit on company supervisory boards, which monitor and appoint members of management boards.

This means German workers have a stronger say when it comes to sharing the pie. For any given decrease in the slice of the government, German workers are more likely to get a bigger slice for themselves. This is not necessarily the case in Australia.

It is therefore difficult to draw implications for Australia from studies that look at the experience of Germany or other countries with significantly different institutional arrangements.

Furthermore, the fact that wages should increase in response to a corporate tax cut does not automatically imply that other economic variables will also respond positively. For instance, the more wages increase in response to a corporate tax cut, the smaller the increase in employment is likely to be.

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Read more:
The full story on company tax cuts and your hip pocket

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This leads to an even more controversial question: what is the effect of corporate tax cuts on real economic activity, such as employment and GDP growth?

The trickle-down effect of corporate tax cuts rests on the idea that business investment would increase once taxes are cut, which in turn leads to the creation of more jobs and faster economic growth.

However, this line of reasoning neglects the fact that investment decisions in today’s globalised world are not necessarily driven by the corporate tax rate.

Many other factors come into corporate investment decisions, such as the quality of institutions, the proximity to important markets, and the cost of labour (wages).

Because of these other factors, the impacts of tax cuts on employment and growth can be small, short-lived, or conditional on other government policy actions, such as managing debt.

In a similar vein, recent theoretical work that incorporates more realistic assumptions about the economy (such as the distribution of entrepreneurial skills in the population) suggests that a tax cut only has a significant impact on economic growth when the tax rate is initially high.

This means that even within a given country, the effect of a corporate tax cut can change depending on initial economic and policy conditions.

Putting tax cuts in a broader context

Beyond growth and employment, the effects of corporate tax cuts should also be considered in terms of deficit and inequality.

From the point of view of the public budget, a cut in the tax rate has to be somehow financed. How?

A first possibility is that the tax cut pays for itself. This is essentially the idea that as the tax rate goes down, the increase in the tax base (e.g. pre-tax corporate profit) is sufficiently large to ensure that the total tax revenue increases.

However, an increase in the tax base would require a significant and sustained increase in business investment, which, as we have already seen, does not necessarily happen.

The government could increase other taxes, but this means the government would effectively be taking from one group of taxpayers (possibly workers themselves) to give to corporations.

Another option is to reduce some government expenditures. But this could also involve taking from one group to give to another. If the decision is made to cut social welfare and public goods like education and health, then more vulnerable segments of the population will bear the cost of lowering the corporate tax rate. This means more inequality in the economy.

Of course the government could decide to just let the deficit be. This would result in higher debt. But can Prime Minister Turnbull (or President Trump for that matter) accept that?

The central economic challenge for Australia is to promote long-term, inclusive growth. Are we confident that this is what corporate tax cuts will deliver? Based on the economic research that I have read, the answer is no.

Fabrizio Carmignani, Professor, Griffith Business School, Griffith University

This article was originally published on The Conversation. Read the original article.

Five ways to kickstart the economy — without cutting company taxes

The Productivity Commission has recommended sweeping changes to how infrastructure is governed.
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Jim Minifie, Grattan Institute

The Productivity Commission has released the first in a planned series of five-yearly updates on productivity in Australia. The report shows that there is much the Australian government can do to boost productivity and living standards.

These include changing how government delivers or controls education and health, and how it manages infrastructure. Interestingly, for the Commission, policy to improve productivity in the private sector (primarily tax and regulation), while still important, plays second fiddle.

The Commission backs up its recommendations in these huge domains by a compendium of analyses spread over hundreds of pages in 16 supporting papers.

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Read more: Why reforming health care is integral for our economy

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The Productivity Commission’s review comes amid a period of slow productivity growth in Australia and around the developed world. Fifteen years ago, most economists expected that the internet revolution and the rapid shift of manufacturing to China would, for all the disruption they entailed, sustain strong growth in the rich world. But those hopes were dashed.

A wide range of research has identified many possible culprits for the productivity slowdown. These include mismeasurement, that “easy wins” such as universal education have already been used up, ageing, risk aversion, and a hit to investment and innovation from the global financial crisis.

One of the Commission’s background papers covers many of these contributors to slow growth.

Australian productivity has grown faster than in many other high-income economies since the financial crisis, largely thanks to the mining boom and to our having avoided a deep recession.

But productivity growth has not been strong enough to keep wage growth strong in the face of declining export prices and some broader weakness as the mining investment boom comes off. Getting policy settings right is urgent to reduce the risk that Australia slides into the stagnation that other high-income economies have experienced.

The recommendations

The new report identifies five priorities to revitalise productivity: health, education, cities, market competition, and more effective government.

The Commission’s estimates imply that its policies would eventually boost GDP by at least two per cent, with additional non-market benefits in longer lives and quality of life.

In health, the report recommends changing funding arrangements, cutting low-value treatments, putting the person at the centre of health care, shifting to automated pharmacy dispensing in many locations, and moving to tax alcohol content on all drinks. The Commission estimates that the value of these reforms is at least A$8.5 billion over 5 years.

In education, the report makes recommendations to build teacher skills, better measure student and worker proficiency, extend consumer law to cover universities, and improve lifetime learning, including better information about the performance of institutions. The Commission does not put a dollar value on these reforms.

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Read more: Myth busting claims on the impact of the company tax cut

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In cities and transport, the report recommends improved governance to stop poor projects being built, budget and planning practices to properly provide for growth and infrastructure, and policies to get more value out of existing and new assets (including road user charges, extending competition policy principles to cover land use regulation, and replacing stamp duties with land tax). The Commission estimates that these reforms would be worth at least A$29 billion per year in time.

To improve market competition, the report suggests a single effective price be placed on carbon, an end to ad-hoc interventions in the energy market, better consumer control of and access to data, and reforms to intellectual property to support innovation. The Commission estimates that these reforms would be worth at least A$3.4 billion per year.

Finally, to improve government, the report recommends that the states and the Commonwealth develop a new formal reform agenda that clarifies who has responsibility for what, tax changes, measures to improve fiscal discipline, and tougher accountability for implementation of agreed initiatives. The Commission does not put a dollar value on these reforms.

What’s missing?

The review’s omissions are informative, and some are glaring.

First, cutting company taxes is conspicuously absent from the proposals. It seems unlikely this omission is an oversight. It would seem, instead, that the Commission does not see a company tax cut as a priority for productivity growth, and is happy for government to make its own case for a tax cut.

Still, the report would have been stronger had it considered the tax mix more fully. There is credible case for a company tax cut, though it is not the only way to stimulate investment, it would take years to pay off, and it would hit the budget without increase in other taxes or spending cuts.

Second, the report gives short shrift to population growth. Governments are racing to keep pace with population growth in Melbourne and Sydney in particular, yet the report does not consider how population contributes to congestion, how it dilutes the value of natural resource rents, and how the challenges it creates for governments make it more difficult for them to deliver reforms that would boost productivity.

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Read more: City planning suffers growth pains of Australia’s population boom

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Third, the report does not give enough attention to reforms to improve market functioning. Many consumers in retail markets for services like energy and superannuation do not know how to identify good products, and so consumers often bear the costs of excess marketing or an excess of providers.

It seems likely that the Commission did not want to prejudge the subject of a current Commission inquiry on superannuation, but other markets have similar problems.

There are other gaps. The report does not give enough attention to macroeconomic stability, or even note the risks posed by the Australian house price boom. It does not mention the problematic National Broadband Network. It pays too little attention to the role of social safety nets in helping people manage risks and making the economy more flexible.

And finally, the report could have made stronger recommendations for better measurement. It is ironic that it finds the biggest opportunities in the health and education sectors, whose output is not measured with much accuracy.

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Read more: Myth busting claims on the impact of the company tax cut

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Overall, the report is something of a landmark, and the Treasurer deserves credit for commissioning it. It condenses much of the policy advice the Productivity Commission has made in recent years, and adds new insights (for example, on land use).

It provides credible, if incomplete recommendations for improving health and education, and cities and transport. It undersells the value of further reforms to private sector regulation and tax. But it underscores how much governments can do on the “home turf” of the things they control most directly.

Now it is up to Commonwealth and state governments to absorb its insights, integrate them into their agendas, and put them into action.

Jim Minifie, Productivity Growth Program Director, Grattan Institute

This article was originally published on The Conversation. Read the original article.

USA: New Taxes and/or Fines

The link below is to an article that takes a look at what it calls ‘the most interesting new taxes across the USA.’ There are some… interesting… ones among them, but perhaps bizarre may have been a better word.

For more visit:
http://www.lifehack.org/articles/money/the-most-interesting-new-taxes-across-the-usa.html

Anti-Christian Sentiment Heats Up

Terrorist threat in Iraq emerges at importune moment for Copts.

CAIRO, Egypt, November 22 (CDN) — As bombings and other attacks continue against Christians in Iraq, Christians in Egypt have gathered to pray and plan for their own safety.

When a group of Islamic extremists on Oct. 31 burst into Our Lady of Salvation church in Baghdad during evening mass and began spraying the sanctuary with gunfire, the militant organization that took responsibility said Christians in Egypt also would be targeted if its demands were not met. Taking more than 100 congregants hostage, the Islamic State of Iraq (ISI) called a television station and stated that the assault came in response to the Coptic Orthodox Church in Egypt allegedly holding two Coptic women against their will who, the ISI and some others believe, converted to Islam.

The group issued a 48-hour deadline for the release of the women, and when the deadline passed it issued a statement that, “All Christian centers, organizations and institutions, leaders and followers are legitimate targets for the muhajedeen [Muslim fighters] wherever they can reach them.” The statement later added ominously, “We will open upon them the doors of destruction and rivers of blood.”

In the attack and rescue attempt that followed, 58 people were reportedly killed. A week and a half later, Islamic extremists killed four people in a series of coordinated attacks against Christians in Baghdad and its surrounding suburbs. The attackers launched mortar rounds and planted makeshift bombs outside Christian homes and one church. At least one attack was made against the family members of one of the victims of the original attack.

On Nov. 15, gunmen entered two Christian homes in Mosul and killed two men in the house. The next day, a Christian and his 6-year-old daughter were killed in a car bombing. At the same time, another bomb exploded outside the home of a Christian, damaging the house but leaving the residents uninjured, according to CNN.

The threats against Christians caused a flurry of activity at churches in Egypt. A 35-year-old Protestant who declined to give her name said Christians in Cairo have unified in prayer meetings about the threats. An SMS text message was sent out through prayer networks asking people to meet, she said.

“I know people are praying now,” she said. “We have times for our people to pray, so all of us are praying.”

Security has increased at churches throughout Egypt. In Cairo, where the presence of white-uniformed security police is ubiquitous, the number of uniformed and plain-clothes officers has doubled at churches. High-ranking police officers shuffle from one house of worship to another monitoring subordinates and enforcing new security rules. At times, parking on the same side of the street as a church building, or even driving by one, has been forbidden.

On Nov. 8, leaders from the Anglican, Catholic and Orthodox churches gathered to discuss how to improve security at churches. According to the leaders of several churches, the government asked pastors to cancel unessential large-scale public meetings. Pope Shenouda III canceled a celebration to commemorate the 39th anniversary of his installment as the leader of the Coptic Orthodox Church. Guests at a recent outdoor Christmas bazaar and a subsequent festival at the All-Saints Cathedral in Zamalek
were greeted with pat-downs, metal detectors and bomb-sniffing dogs.

Some church leaders, speaking on condition of anonymity, said the security improvements are haphazard, while others say they are genuine efforts to ensure the safety of Christians.

Most Christians in Cairo avoided answering any questions about the attacks in Iraq or the threats made against Christians in Egypt. But Deliah el-Sowkary, a Coptic Orthodox woman in her 20s, said she hoped no attacks would happen in her country. Noting the security present at all churches, still she said she is not that worried.

“I think it’s different in Egypt than in Baghdad, it’s more safe here,” El-Sowkary said.

Almost a week after the bombings, Egyptian President Hosni Mubarak issued a statement through the state-run MENA news agency that the Copts would be protected from attacks.

“The president affirmed his extensive solicitude for the protection of the nation’s sons, Muslims and Copts, from the forces of terrorism and extremism,” the agency stated.

 

Pressure Cooker

The security concerns came against a backdrop of heightened tensions between the Muslim majority and the Coptic Christian minority over the past few months, with weeks of protests against Christians in general and against Shenouda specifically. The protests, held mostly in Alexandria, ended two weeks ago.

The tension started after the wife of a Coptic priest, Camilia Zakher, disappeared in July. According to government sources and published media reports, Zakher left her home after a heated argument with her husband. But Coptic protestors, who started gathering to protest at churches after Zakher disappeared, claimed she had been kidnapped and forced to convert to Islam.

Soon after, Egypt’s State Security Intelligence (SSI) officers found her at the home of a friend. Despite stating she had left of her own free will, authorities brought Zakher back to her husband. Since then, Zakher has been in seclusion. It is unclear where she is or if she remains there of her own free will.

Unconfirmed rumors began spreading that Zakher had converted to Islam and was being held against her will to force her to return to Christianity. Protests outside mosques after Friday prayers became weekly events. Protestors produced a photo of unknown origin of a woman in Islamic covering whom they claimed was Zakher. In response, Coptic authorities released a video in which the priest’s wife stated that she wasn’t a Muslim nor ever had been.

Another rumor began circulating that Zakher went to Al-Azhar University, one of the primary centers of Islamic learning in the world, to convert to Islam. But Al-Azhar, located in Cairo, released a statement that no such thing ever happened.

No independent media interviews of Zakher have taken place because, according to the Coptic Church, the SSI has ordered church officials not to allow public access to her. Along with their accusations about Zakher, protestors also claimed, without evidence, that a similar thing happened in 2004 to Wafa Constantine, also the wife of a Coptic Orthodox priest. Constantine was the second woman the ISI demanded the Copts “release.” Like Zakher, her location is not public knowledge.

The month after the Zakher incident, Egyptian media reported in error that the SSI had seized a ship from Israel laden with explosives headed for the son of an official of the Coptic Orthodox church. The ship was later found to be carrying fireworks, but another set of Islamic leaders, led in part by Nabih Al-Wahsh, an attorney famous for filing lawsuits designed to damage the church, declared without any evidence that Copts were allied with the Israelis and stockpiling weapons in the basements
of their churches with plans to overthrow the Muslim majority.

The claims were echoed on Al-Jazeera by Dr. Muhammad Salim Al-’Awa, the former secretary-general of the International Union of Muslim Scholars, and in a statement issued by the Front of Religious Scholars, a group of academics affiliated with Al-Azhar University.

There was no time for tensions to cool after Al-’Awa and the others leveled their allegations. The next month, Bishop Anba Bishoy, the secretary of the Synod of the Coptic Orthodox Church, told the Egyptian newspaper Al-Masri Al-Yawm that Muslims were “guests” in Egypt, inflaming a Muslim population already up in arms.

“The Copts are the root of the land,” the bishop said. “We love the guests who came and settled in our land, and regard them as brothers, but they want to control even our churches? I reject anything that harms the Muslims, but as Christians we will do everything, even die as martyrs, if someone tries to harm our Christian mission.”

Around the same time, the Front of Religious Scholars called for a complete boycott of Christians in Egypt. The group called Christians “immoral,” labeled them “terrorists” and said Muslims should not patronize their businesses or even say “hello” to them.

The statement by the scholars was followed by a media leak about a lecture Bishoy was scheduled to give at a conference for Orthodox clergy. In his presentation, Bishoy planned on questioning the authorship of a verse in the Quran that calls Christians “blasphemers.” Muslims believe that an angel revealed the Quran to Muhammad, Islam’s prophet, who transmitted it word-by-word to his followers. Bishoy contended there was a possibility the verse in question was added later.

The mosque protests became even more virulent, and the conference was abruptly cancelled. Bishoy was forced to issue an apology, saying he never meant to cast doubt on Islam and called Muslims “partners” with the Copts in Egypt. Shenouda also issued an apology on national television. By comparison, an Islamic publishing house that rewrote and then issued what it termed the “true Bible” caused barely a stir.

Al-’Awa then blamed the deteriorating state of Muslim-Christian relations on Shenouda and Bishoy. He accused the Coptic Orthodox Church of exploiting the government’s “weak stance” toward it and “incarcerating anyone [who] is not to its liking.”

The Al-Azhar Academy of Islamic Research issued a statement that declared, “Egypt is a Muslim state.” The statement further went on to read that the Christians’ rights were contingent on their acceptance of the “Islamic identity” of Egypt. The statement was endorsed by Ali Gum’a, the mufti of Egypt.

The statement also referenced an agreement made between Muhammad and a community of Egyptian Christians in the seventh century as the guiding document on how Christians should be governed in a Muslim-dominated state. If ever codified into Egyptian law as many Muslims in Egypt desire, it would legally cement the status of Christians in the country as second-class citizens.

In 639, seven years after Muhammad died, Muslim armies rode across from Syria and Palestine and invaded Egypt, then controlled by the Byzantines. At first the Muslims, then a new but well-armed minority within Egypt, treated the conquered Christians relatively well by seventh century standards. But within a generation, they began the Islamization of the country, demanding all official business be conducted in Arabic, the language of the Quran, and Coptic and Jewish residents were forced to pay special taxes and obey rules designed to reaffirm their second-class status.

In the centuries since then, the treatment of Christians in Egypt has ebbed and flowed depending on the whim of those in power. After the coup of 1952, in which a group of men known as the Free Officers’ Movement took power from a European-backed monarch, Copts have seen their treatment decline.

In 1971, then-President Anwar Sadat introduced a new constitution designating Islamic law as “a principle source of legislation” in Egypt. In 1980, the National Assembly made Islam the official religion of the state.

Estimates of the Coptic population range from 7 to 12 percent of Egypt’s 84 million people. They are accepted by some in Egypt and openly discriminated against by others. Violent attacks against Christians – which the government does little to prevent – accentuate tensions.

The state also routinely harasses converts to Christianity from Islam. Many have to live in some sort of hiding.

The Protestant woman said she was not sure whether attacks would happen in response to the threats, but whatever happens, she said she expects that Christians in Egypt will continue to endure persecution.

“According to the Bible, we know this is going to happen,” she said. “This is not new or novel for us. The Bible said that we will be persecuted. It is expected.”

Report from Compass Direct News

Uzbekistan: State close to removing Baptist leadership

Baptists in Uzbekistan have told Forum 18 News Service that they fear the head of the Baptist Union, Pavel Peichev, and the Union’s accountant Yelena Kurbatova will now be removed from their roles leading the registered Baptist Union.

This follows a Criminal Court in the capital Tashkent upholding the criminal conviction of the two, as well as of a Baptist layman Dmitri Pitirimov. The Court also upheld a three-year ban on each holding responsible positions. However, the court overturned massive fines on each.

The three continue to insist that the charges against them of evading taxes and involving children in religious activity without their or their parents’ consent were fabricated. Peichev stated that an appeal to the Supreme Court will probably be made.

"The conviction was unjust and we want it overturned," he told Forum 18. Baptists in Uzbekistan have repeatedly insisted to Forum 18 that the authorities’ main aim was to remove the leadership of the Baptist Union, continuing a pattern of state interference in the leadership of religious communities such as the Muslim and Jewish communities. Also, the Justice Ministry has forced a church website to close.

Report from the Christian Telegraph 

Chinese Pastor Sentenced to 15 Years in Prison

Harsh punishment for house church leader based on apparently far-fetched charge.

LOS ANGELES, December 8 (CDN) — Chinese authorities have quietly sentenced Uyghur Christian Alimjan Yimit (Alimujiang Yimiti in Chinese) to 15 years in prison on the apparently contrived charge of “providing state secrets to overseas organizations,” according to China Aid Association (CAA).

The charge against the 36-year-old house church leader, held for more than two years at Kashgar Detention Center in China’s troubled Xinjiang region, was apparently based on interviews he granted to media outside of China, according to his lawyer, Li Dunyong.

“The 15-year sentence is far more severe than I originally expected,” Li said in a CAA press statement released yesterday. “It is the maximum penalty for this charge of ‘divulging state secrets,’ which requires Alimujiang’s actions to be defined as having ‘caused irreparable national grave damage.’”

CAA President Bob Fu said Alimjan’s sentence was the most severe for a house church leader in nearly a decade.

“The whole world should be appalled at this injustice against innocent Christian leader Alimujiang,” Fu said in the CAA statement. “We call upon the U.N. and people of conscience throughout the world to strongly protest to the Chinese government for this severe case of religious persecution.”

CAA reported that officials had read the verdict to Alimjan while he was incarcerated on Oct. 27. Li confirmed to CAA that he had filed an appeal.

Initially the Bureau of State Security of Kashgar detained Alimjan on “suspicions of harming national security” on Jan. 11, 2008, according to CAA. As such charges are generally leveled against those considered to be an enemy of the state, Alimjan’s family feared he would be subjected to capital punishment. Local sources have said that Alimjan, a convert from Islam in an area teeming with separatist tensions, loves and supports the Chinese government.

“As a loyal Chinese citizen and business entrepreneur, Alimujiang has held to high standards, paying his taxes faithfully and avoiding a common local custom of paying bribes for business favors,” Fu said in a previous CAA statement. “He has also done his best to assimilate into Chinese culture, making the unusual decision to send his children to a Chinese language school in a predominantly Uyghur area.”

Friends of Alimjan have said he simply wanted the freedom to quietly express his faith, a right guaranteed to him in the Chinese constitution, according to CAA. Not only is it illegal for him to own a Uyghur Bible, according to the advocacy organization, but he is also prohibited from attending services at the government-controlled Three Self Church in the area because the Xinjiang constitution contradicts China’s constitution. He is also prohibited from praying with foreign Christians.

On Feb. 20, 2008 the initial charges against him were changed to “inciting secession” and leaking state secrets. Court officials returned Alimjan’s case to state prosecutors in May 2008, citing lack of evidence.

This year he was secretly tried again on July 28, only on the second charge. Previously, attorney Li had petitioned for and been granted permission to meet with his client on April 21. Witnesses had seen police and a prison doctor escorting Alimjan to hospital on March 30, and Compass sources said Alimjan had been beaten in prison, although it was not clear who beat him or why.

When Li questioned him, Alimjan indicated that he was not allowed to speak about his health.

The United Nations Working Group on Arbitrary Detention ruled his arrest and detention to be arbitrary and in violation of international law.

“The whole case is about religious faith issues, which are being used against Alimujiang for his conversion from Islam to Christianity by biased law enforcement agents, prosecutors and the court,” said attorney Li. “The key for this case was the flawed ‘Certificate for the Evidence.’ In both form and content, the certificate was questionable. It even had no signature by the verifier at the bureau, which violates Chinese law.”

Sources said there appears to be a concerted effort to shut down the leadership of the Uyghur church in a restive region where authorities fear anything they cannot control. The region of ethnic Uyghurs has come under a government crackdown the past two years as long-simmering tensions erupted.

Disputes over ownership of Xinjiang’s land and rich mineral resources have led to resentment between Uyghurs – native to Xinjiang – and Han Chinese. Religious differences are also an issue, with a vast majority of Uyghurs practicing Islam, while most Chinese are officially atheists or follow Buddhism or syncretistic folk religions. Only a handful of China’s estimated 10 million Uyghurs are known to be Christians.

Report from Compass Direct News 

ISRAEL: CHURCH SHOWERED WITH STONES IN NORTH

With attacks mounting, parishioners fear hostilities could escalate.

MIGDAL HA-EMEQ, Israel, June 22

 

(Compass Direct News) – When the congregation at St. Nicolay church in this northern Israeli town gathered on that quiet Friday morning of May 29, they never expected to be showered with stones.

The Russian Orthodox worshipers, including many women, children and the elderly, had filled the small building to overflow with several outside when they were stunned by the rain of stones. Some were injured and received medical care.

“The church was crawling with people – the worshipers stood not only inside the church, but also outside, as the building is very small, when suddenly a few young men started throwing stones at the direction of our courtyard,” Oleg Usenkov, press secretary of the church told Compass. “Young children were crying, everyone was very frightened.”

The church had also been attacked earlier that week, during a wedding ceremony. Stones and rotten eggs were thrown from the street, hitting guests as they arrived.

The same night, the Rev. Roman Radwan, priest of St. Nicolay church, filed a complaint at the police station. An officer issued a document to confirm that he had filed an official complaint and sent him home, promising that measures would be taken. But within 24 hours, the attackers again appeared at the church’s doorway and no police were present to deter them – although the police station is located a few dozen meters from the church.

The identity of the assailants is unknown – a police officer said the complaint “lacked the exact description of the attackers” – but eye-witnesses claimed they were ultra-orthodox yeshiva students who frequently cursed the church on their way to the school or synagogue.

“They often assault us verbally, curse and yell at us, although we tried to explain that this is a place of worship, a holy place,” said a frustrated Usenkov, adding that the police inaction amounts to nonfeasance.

Another member of the congregation identified only as Nina, born in Moscow and now living in Nazeret Ilit, said that she didn’t understand where all the hatred is coming from.

“They are heading to the yeshiva or going back home after praying at the synagogue – are they inspired to attack us during their prayers?” she said. “I hope not. We are all Israeli citizens, we pay taxes, serve in the army and are entitled to freedom of choice when it comes to religion.”

She and other members of the congregation fear hostilities could escalate quickly if measures are not taken soon. Already the small building, which barely accommodates the worshipers, is surrounded by a stone fence by order of Migdal ha-Emeq officials following a series of arson attempts and other attacks.

Members of the congregation, a few hundred Christians from Migdal ha-Emeq, Afula, Haifa, Nazareth and other Israeli cities still remember how their building was vandalized in June 2006. Under cover of darkness, unidentified men broke in and broke icons and modest decorations, smashed windows and stole crosses.

The identity of those responsible remains unknown.

Established in 2005, the church building was constructed to meet the needs of Christians who do not belong to the Arab Christian minority, mostly Russians who came to Israel from the former Soviet Union in the 1990s. Besides the Christians, these immigrants included other non-Jews, as well as atheistic Jews and Jewish converts to Christianity.

No official data on religious make-up of the immigrants are available, especially since many fear deportation or persecution for talking openly about their faith, but Usenkov – a Russian Jew who converted to Christianity after immigrating to Israel in the 1990s – said he believes there are at least 300,000 Christians of Russian or Russian-Jewish origin who live in Israel today.

According to Israeli law, non-Jewish relatives of a Jew are also entitled to citizenship, but Jews who have converted to other faiths are denied it.

Most of the Russian and Russian-Jewish Christians in Israel belong to the Russian Orthodox Church and find it difficult to adjust to Greek or Arabic services common in the Greek Orthodox churches of Israel. Since St. Nicolay’s church opened its doors, hundreds of worshipers from across Israel have visited it.

“Many people fear they might pass away without seeing a priest, or they dream of a Christian wedding service,” said Radwan, an Israeli-Arab whose family once owned the land on which the St. Nicolay church is located. “Here we can answer their needs. We do not want to harm anyone and wish that no one would harm us.”

Report from Compass Direct News

TURKEY: ANCIENT MONASTERY THREATENED

Muslims’ legal action against 1,600-year-old structure called ‘malicious.’

ISTANBUL, January 22 (Compass Direct News) – Syriac Christians in southeastern Turkey say a land dispute over the historic Mor Gabriel Monastery is part of a larger system of discrimination against the religious minority in this overwhelmingly Islamic country.

Muslim residents of southeastern Turkey dispute the boundary lines of an ancient Christian monastery dating to the fourth century as being unnecessarily large for the needs of a religious community. Islamic village leaders from Yayvantepe, Eglence and Candarli are attempting to confiscate one-third of the monastery’s property, claiming it was wrongfully appropriated and that they need it for their livestock.

Area Muslims also say the land in question is forest and thereby registered as land belonging to the State Treasury.

“Our land is being occupied by the monastery,” said Ismail Erlal, village leader of Yayvantepe, according to Cihan News Agency. “We make use of the forest there and pasture our animals; we won’t give up our rights.”

Among the most contentious issues are the monastery walls built around its perimeter, rebuilt 15 years ago. Village leaders complain in a lawsuit to obtain the land that the monastery has gone beyond its rightful bounds. In August the land survey office of Midyat said it had determined that 270 hectares of the monastery’s 760 hectares were government property, including land inside and outside the monastery’s walls.

A court in Mardin originally scheduled a hearing for Friday (Jan. 16) to determine the legal status of the monastery walls, but it was rescheduled to Feb. 11 to allow the court more time to examine the case. At the February hearing the court will determine if the 270 hectares of land belong to the government or the monastery.

Metropolitan Timotheos Samuel Aktas, leader of the monastery, answered in a report that the monastery has the right to leave its land uncultivated and has paid taxes on the property since 1937.

The state originally charged the monastery with being founded illegally, but it dropped those charges by canceling a hearing originally schedule for Dec. 24. Rudi Sumer, the attorney representing the monastery, said that the claim was groundless since the monastery has foundation status dating back to modern Turkey’s origins, not to mention centuries of existence beforehand.

The mayors of Yayvantepe, Eglence and Candarli also charged the monastery with attempting to proselytize young children (illegal in Turkey) and carrying out “anti-Turkish” activity.

Metropolitan Aktas said in a report that these claims were groundless and of the same provocative nature that has historically sparked violence against Turkey’s Christians.

“All the allegations are frivolous and vexatious, devoid of any logic or evidence, solely aimed with the malicious intent of rousing anti-Christian sentiments by the surrounding Muslim villages,” he said.

 

Europe Watching

Mor Gabriel Monastery, founded in 397, is the most revered monastery for Syrian Orthodox Christians. It is inhabited by 15 nuns and two monks and is the seat of Metropolitan Bishop of Tur Abdin Diocese.

In recent decades the monastery has turned into a religious and social center for the country’s remaining Syriacs by offering schooling to children and teaching their ancient language of Syriac, a variant of the language spoken by Jesus.

“The monastery is everything for us,” said a Syrian Orthodox Christian who grew up in Turkey’s southeast. He added that many families in the area had named their children after Mor Gabriel. “Syriacs would give up everything for the monastery.”

An international outcry from the European Parliament and numerous Assyrian organizations throughout Europe arose in response to the charges, according to the Assyrian International News Agency. A member of the German consulate said his country would monitor the case closely, as Turkey is attempting to join the European Union and its human rights record has come under close scrutiny.

Many Syrian Orthodox Christians have left southeast Turkey in the last 30 years as violence escalated between the military and Kurdish terrorists. In the last five years, however, some Syriacs have begun returning home – only to find their property occupied by others.

Residents who fled Mardin province in the mid-1980s returned to find two of their village’s Syriac churches converted into mosques. And the demographic shift from Syriacs to Kurds has increased pressure on the monastery.

“Turkey must protect its Assyrian community,” said Swedish parliamentarian Yilmaz Kerim to the Hurriyet Daily News. He visited the monastery as part of a delegation in December. “There are only 3,000 left in Midyat.”

The lawsuit has the support of a local parliamentarian who claims Christians relished their opportunity to leave Turkey. Süleyman Çelebi, member of the ruling Justice and Development Party (AKP), said Syrian Orthodox Christians had never come under pressure, despite their claim that they were exploited, and even emigrated away from Turkey “with joy” in previous decades.

The three villages that brought the lawsuit against the monastery overwhelmingly supported the Islamic-rooted AKP in last year’s national elections. Çelebi claims that the official boundaries of the monastery were established in Ottoman times but not properly observed by the Syriac Christians.

According to the 1923 Lausanne Treaty, Turkey grants full protection to churches, synagogues and other religious establishments to freely practice their own religions. But this treaty only designated Greek and Armenian Orthodox Christians and Jews, creating complications for groups such as the Syrian Orthodox and Protestants to open schools and churches.

Syriac Christians claim to be one of the first people to accept Christianity in the Middle East. Their historic homeland stretches through southeastern Turkey, but their numbers have dwindled to 15,000 following decades of government pressure and fallout from war against the Kurdistan Workers’ Party.  

Report from Compass Direct News