• Last updated: Thursday 26 May 2016, 21:13:40.

A Catholic reform group in Germany criticized the country's bishops Monday for declaring that believers who refuse to pay religious taxes won't be able to receive the sacrament, become godparents or work in church institutions.

A century-old agreement with the state adds up to nine percent to the income tax bill of Germany's 25 million registered Roman Catholics, earning the church more than (EURO)4 billion ($5.2 billion) annually.

The same tax applies to Protestants and Jews.

The churches use the income to pay employees' salaries and fund social work such as care for the elderly.

The churches themselves aren't taxed by the state but instead pay an administrative fee for the collection of religious tax.

Donations represent a far smaller share of the churches' income than in the United States.

The Catholic bishops' decree in Germany last week is part of an attempt to stem the steady flow of people who opt out of paying religious taxes.

It declares that they have committed a "grave lapse" and effectively left the church.

But the group We are Church – which claims to represent tens of thousands of grassroots Catholics – said the bishops' decision to freeze believers out if they don't pay up was "the wrong signal at the wrong time."

"Instead of seeking to understand the reasons for the high number of people leaving the church, this decree by the bishops represents a threat to the church's members," it said.

The group said many German Catholics choose not to pay religious taxes because they disagree with the church's actions, not because they have lost their faith.

It said the decision undermined the bishops' own efforts to regain credibility among believers who have become disenchanted by the fact that for decades the Catholic Church covered up child abuse by priests.

Almost 3 million German Catholics have opted out of paying church taxes in the past two decades.

In 2010, at the height of abuse revelations in Germany, some 180,000 took the step – the highest yearly number ever recorded.