FEATURE-Debt crisis taxes cosy Greek Church-state ties
* Campaigners accuse Church of avoiding tax payments
* Church says it shares burden of crisis, pays its taxes
* Socialist government doesn't dare touch Church, adviser
* Political pressure mounts for Church to do more
By Paul Taylor and Renee Maltezou
ATHENS, July 15 (Reuters) - The Greek Orthodox Church owns more land than anyone except the state, employs thousands on the public payroll, has a stake in the nation's biggest bank, but campaigners say its tax payments are derisory.
The Church vehemently denies accusations it is one of Greece's biggest tax dodgers and says it is playing a vital social, economic and spiritual role in this time of hardship.
With the third year of recession tormenting Greece's 11 million people, the Church has provided solace, comfort and nourishment but activists say it's now time to dig deep into its coffers to help with the bailout.
The Greek Orthodox Church has long enjoyed a privileged, some would say cosy, status when it comes to taxes in a country where it is responsible for the sole official religion, with one critic calling its complex finances at best opaque.
But the sovereign debt crisis that has rocked the Greek state, thrown hundreds of thousands of people out of work, and forced painful cuts in salaries, pensions and benefits, has raised fresh questions about the Church's tax position.
More than 100,000 people have joined a Greek Facebook page "Tax The Church", and 29,000 have so far signed an online petition urging the state to harness "the huge fortune of churches" to reduce Greece's crushing budget deficit.
"The Church must pay its share of the tax burden," said former finance minister Yannos Papantoniou. "It is totally unreasonable in this situation that they contribute so little."
The Church angrily denies accusations it doesn't pay its fair share. "This is a lie. We pay more land tax than ordinary businesses and we pay 20 percent of our rental income in tax," said Father Timotheos, the Greek Church's Holy Synod spokesman.
Despite the growing demands for more transparency, Prime Minister George Papandreou's PASOK socialist government doesn't dare take on the powerful Church, an adviser to the premier acknowledged, speaking on condition of anonymity.
Church finances, lands and other concerns are so labyrinthine they are hard to penetrate, analysts said. The Church's total tax payment is not made public, and Father Timotheos said churches are responsible for their own taxes.
The Holy Synod paid 1.3 million euros in tax last year, said Father Timotheos, adding: "We could have challenged this in the European courts, but we didn't because we want to help the state and our homeland."
There is plenty of anecdotal evidence about the assets of the Church, which owns, for example, a stake of about 1.5 percent in Greece's largest bank, National Bank of Greece.
Given this kind of wealth, campaigners want the Church to pay more towards its own upkeep.
The state at the moment pays the salaries of about 9,000 black-robed priests, including about 100 metropolitans who run the Church, as well as the pensions of retired clergy.
It costs the public purse 268 million euros a year, Facebook campaigners say. Father Timotheos said that was justified as the Church handed over 96 percent of the land it held when Greece became independent from the Ottoman Empire in 1821.
Over the centuries before Turkish rule, Byzantine emperors gave vast swathes of the country to the men of God.
In the Ottoman era, many Greek families entrusted their property to the Church for safe-keeping to avoid expropriation by the Turks. Records were poor and it was not always returned.
The government is now under intense pressure from the IMF and the EU to sell off public assets, including real estate.
Part of the problem is no one knows how much property the Church has. Greece has no central land registry and the Church's decentralised structure means it does not know what it owns.
"The Greek Church is paying almost nothing in taxes to the Greek state for the total assets that it controls", one senior tax expert, who declined to be named, told Reuters.
From the smallest village in northern Greece, where farmers pay rent to the Church, to the smart suburbs of Athens, where the Church owns prime real estate in the seafront millionaires' neighbourhood of Vouliagmeni, the land holdings are enormous.
Stefanos Manos, another former finance minister from the early 1990s, said the Church's real estate portfolio was worth billions of euros but it had always resisted an outside audit.
Manos, a centre-right liberal, clashed on television this month with the Metropolitan of Thessaloniki, demanding an independent survey of church property and arguing that it should take over the payment of clerical salaries and pensions.
Father Timotheos countered that the Church was effectively subsidising the state. Several ministry buildings, universities and hospitals in Athens are on church property, leased to the state for a pittance or free of charge, he said.
The Church is currently lobbying authorities to be allowed to develop Vouliagmeni which is zoned as protected forest.
Archbishop Hieronymos of Athens, the head of the Greek Church, raised the issue with new Finance Minister Evangelos Venizelos at their first meeting, Father Timotheos said.
The implication is that even though the government is desperate for revenue, neither the state nor the Church has an interest in a public day of reckoning over taxes and land.
"It is scandalous that we don't know, and indeed they don't know what they own," Manos said. "It all starts from this opaque situation. But no one wants to know. No one wants transparency."
The Church may not be the pillar of Greek life that it was a century ago but it still wields influence in this predominantly orthodox society and priests command respect and provide continuity in many communities.
"It's the third rail of Greek politics. If you touch it, you die," the adviser to Papandreou said, comparing the issue to the high voltage electrified rail on some train tracks.
Asked why he had not acted to make the Church pay more while he was finance minister in 1994-2001, Papantoniou said PASOK had taken a beating when the Church fought the government over national identity cards and had no stomach for another fight.
"It's a classic case of measuring the political costs," he told Reuters in an interview. "The government paid a high price over identity cards, and before that in a battle in the 1980s over church property."
The clergy's ability to mobilise mass rallies was so great the current prime minister's father, Andreas Papandreou, had to abandon a plan to nationalise large tracts of church land.
No wonder one of Venizelos' first promises as minister last month was to keep paying clergy salaries and pensions.
The Church says it is pulling its weight in the crisis by stepping up assistance -- from soup kitchens to debt relief and counselling -- for Greeks who have fallen on hard times.
Church communities are providing 50,000 meals a day for the needy, an increase from 35,000 before the crisis, Father Timotheos said. In some places, they have started "social groceries", handing out staple foodstuffs free, he said, adding:
"We spent about 100 million euros on philanthropic acts in 2010 and we have increased since then. What more can we do?"
Churches were helping distressed people in debt to pay off small loans, either directly or by putting them in contact with wealthy donors, he said.
The Church is maintaining its own levels of employment at a time when public and private sector jobs are being axed. Priests are being trained to care for psychologically fragile parishioners at a time when the suicide rate is on the rise.
Father Timotheos bristled at the suggestion that the Church should be making a bigger contribution.
"People trust the Church above anyone else in this country. Whenever they have a problem, they don't knock on the prime minister's door or a minister's door," he said.
"Their doors are shut. Our doors are open."
(Additional reporting by Lefteris Papadimas; Editing by Peter Millership)
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