The state subsidy for village priests’ salaries is not a commercial or investment agreement and will not be discontinued, Finance Minister Harris Georgiades told MPs on Monday.
Georgiades was invited by the House finance committee to explain why the government continues to subsidise the salaries of priests in rural areas, which since 1983 has reached €136.7 million. This was part of a 1971 agreement between the government and the Church of Cyprus according to which the former undertook to pay half the wages of priests based in rural areas in exchange for certain tracts of church-owned land. The land transfer has never taken place, although priests’ wages continue to be paid. A government bill is pending in the House that would formalise the land transfer.
The director of the church’s audit department, Ioannis Charilaou, said priests’ salaries amount to between €17m and €18m annually with the state subsidy around €6.8m.
The minister said the money paid each year is a political subsidy given in a not so regulated manner.
According to Georgiades the government proposes to continue the payments in addition to the transfer of the real estate included in the agreement.
On whether the agreement is in the state’s interest, Georgiades said that this was not the point, but whether the state thinks it should support the church.
“No government since 1971 has ever questioned or sought to put an end to this practice,” he said, adding that every year since 1971 the budget in question has been included in the state budget and there has never been any political force voting against it.
Main opposition Akel had said last week the deal was an example of the state and the church exchanging favours to the detriment of taxpayers.
Georgiades said that since 1971 the state had given around €150m to the church in subsidies.
According to the minister subsidising priests’ salaries takes place in most European states including France, which is the model country for the separation of state and church.
“In other European states there is a tax that is compulsory for churchgoers,” he said.
Among changes to the agreement in question is putting a ceiling on the increase of the subsidy and proposing giving the money to the church fund which complements the salaries of the priests and not directly to each priest to avoid the risk of this being considered an employer-employee relationship and having to pay contributions to Gesy and social security on the €680 given as subsidy for each priest.
State Treasurer Rea Georgiou told MPs that the procedure for the transfer of church land to the government will be completed by the end of the month.
The minister said that after the transfer is completed, the state will be able to utilise that property.
Opposition MPs however said they were still not convinced.
Akel MP Stefanos Stefanou said while the government had tried in previous committee meetings to convince them “with false and misleading statements” that its agreement with the church was in the interest of the state, “finally at the fourth meeting the minister of finance came to reveal to us that it is not a question of whether it is beneficial or not, but that it is a government political subsidy of priests’ salaries.”
He said issues also remain concerning transparency and the management of funds.