Indeed is your challenger saying that the Catholic Church never denied liberties to non Catholic subjects, hello can we say Spanish Inquisition......
The Spanish Inquisition didn't attempt to assert temporal power over the state, though. In fact, it ended up being basically an organ of the state; when the Spaniards shut it down, they didn't even bother to ask Rome's permission.
Keep in mind, also, that it was the Spanish government that asked the Church to establish the Inquisition, not the other way around.
One of the biggest myths about history is that the Spanish Inquisition was some kind of Church-sponsored crime. The reality is that the Catholic Church implemented what we now call the "Spanish Inquisition" specifically in response to excessive measures that had been taken by the civil government of Spain to deal with the threat of Islam in Spain.