Labour, private schools VAT and universities

[BloodyHellKen]

Following on from the thread about Labour, private schools and VAT please could someone explain to me why we shouldn't be concerned that a Labour govt wouldn't remove tax exemption from universities also as they are also VAT exempt in the same way private schools are.

I'm not personally worried about VAT being added onto private school fees and I recognise arguments for and against but the possibility of VAT being added onto a university education does really concern me.

Anyone?

https://www.theguardian.com/commentisfree/article/2024/may/20/vat-private-schools-labour-low-income-kids-tax-bursaries

They aren’t going to ‘let’ low income kids attend.
That’s about as realistic as trickle down economics. Wealthy people hoard their money and their privilege- it’s how they stay wealthy and protect it all for their own children and peers

Because bursaries which pay fees for lower income families don't exist do they?

You are coming across exactly the same as Reeves/Starmer etc, completely closed minded and not prepared to be open to changing your world view, which is increasingly being proven to be incorrect.

I am going to save my breath.

As an aside, nobody in economics talks about "trickle-down" except the hard-left. It's a strawman - people set it up so they can point out it's idiotic, which it is, like the concept of "hoarding" wealth.

Please do have a look at the following and tell your friends next time they hit you with "trickle-down" or "hoarding wealth".

Thomas Sowell on the “trickle Down” Myth: Workers Are Always Paid First and Then Profits Flow Upward Later – If at All | American Enterprise Institute - AEI

The vast majority already do, through bursary schemes.

It's also a hilarious remark about "hoarding". Spending £100ks on school fees and employing lots of lower-paid and taxpaying staff doesn't seem to be a particularly good way to hoard money.

Wow! Lots of differing opinions on here. I don't know if anyone is really considering that a lot of children from military families are attending private schools to allow them educational stability. This is the reason we chose to send our son to a private school and he has been boarding when we were posted abroad. It's a worry that there could be a 20% hike in the fees, my husband is in the Army, he's served for 27 years and we've been married for 25 of them. The whole time we've never lived anywhere for more than about 5 years and that was lucky. I know people say children are resilient etc but not all are and we made a choice for our son not to be permanently disrupted because of his Dad's job. It's really sad to hear the stereotyping, that people are paying for privilege etc for their children and that only wealthy or hard working people can afford to send their children to private schools. I know single parents who work shifts that have had a bad experience with unreliable child care and have opted for a private school to gain certainty of childcare, where flexi boarding can be used for overnights. It isn't always about privilege, but stability and reliability outside of school hours. You cannot get this in state schools and therefore people pay. I wonder if anyone else feels like a lot of the comments on here sound a bit like we should all live under a communist regime!

I worked in an independent school - don’t you get all/most of the fees paid for you? Military children at the school I worked in did.

In addition to the above, if / when the VAT is shoved on our bill we'll do what loads of parents will do and suck it up and feel mighty peeved that the tax man has taken another chunk of our hard earned wages, we are hardly likely to drag our child out of school unless we absolutely had to. It defeats the purpose of sending him. I do wonder if the alledged millions they plan to raise will end up not coming to fruition after all and what little did get clawed into the coffers really will get spent on thousands more teachers for state schools....road tax being spent on the roads.....say no more.

You miss my point entirely. It's not all rich people sending their children to purchase privilege. We have claimed CEA at times, currently we do not, we pay the bill entirely. Either way, we will see a hike of 20%, there is no knowing how CEA claimants will be impacted so it is a worry for military families. Surely you can appreciate that perspective?

Not if you aren’t paying it…
im sure there’s a way round that.

Not even close to how CEA works. It's 90pc of fees up to a cap, then the family pays everything over the cap. The cap isn't enough to pay for pretty much any boarding schools. So military families on CEA (officers and soldiers alike) are very much exposed to the education tax.

Also it's unlikely Labour will increase the cap. So families will cop VAT on the full fee, not just the part they pay for today.

You're sure? Are you writing the CEA policy? You again miss the point entirely and seem somewhat fixated on your viewpoint. Some people (for example those in the Military, single parents with shift rotations, people who have been let down repeatedly by childcare provision) find their circumstances fit with what private / independent schools offer and state schools don't. They pay for that reliability and stability. Private schools are not just for the wealthy, parents do not just send their children to purchase advantage and that is an honest perspective given my own experiences. CEA is also very tightly scrutinised and military parents won't always be in a position to claim depending on their domestic and posting circumstances. We currently pay the fees ourselves but have put our child into private school to provide educational and social stability for what would otherwise be seriously disruptive. We're not elite, nowhere near!

@MisterChips its not an education tax. Emotive nonsense.
@Melopia12 only an elite can afford it, sorry. It may not be a social elite, but you have to be in the very top percentage of income. I was a single parent and a teacher with significant responsibility allowances. There is no way on this earth I could have afforded private schooling for my daughter, and that was years ago before the recent massive price increases.

its not an education tax

Of course it is. Even the VAT legislation which exempts school fees from VAT mentions the word “education”. The proposed VAT is a tax charge on fees charged for providing an education.

"it's not an education tax". Boom. What can I please call it, in your opinion?

I mean, I'd like to call it what other countries in the world call it, but I can't, because there's no other country in the world that taxes education. Greece tried it, and the Economist here refers to it as "a tax on private education" before going on to conclude it caused "general mayhem".

I'm also following the example when it was proposed to put VAT on Greggs. "A pasty tax" it was called. So I'm sticking with "education tax".

you have to be in the very top percentage of income. There are definitely families paying full fees in the second and third income deciles, and families on bursaries across the entire spectrum. Besides which if it was "the top percentage", how on earth would we have 6-7% of children attending independent schools?

I mean, I'd like to call it what other countries in the world call it, but I can't, because there's no other country in the world that taxes education.

New Zealand charges GST on private school fees.

It already has a name. value Added Tax. Because it’s for luxuries. Education is free at the point of use in the U.K. If you choose independent, it’s a luxury. It’s not a tax on the education.
Edit to add: 6 or 7 percent seems pretty elite to me. Only people with inc9mes way, way above the average can afford it.

you have to be in the very top percentage of income

This just isn’t true. Around 20% of all children attend private school at 6th form level. Many private school parents are not in the top percentage of income.

Private schools in NZ receive government funding. GST is also charged at a lower rate than VAT.

Incorrect. VAT isn't a luxury tax, it is a sales tax. Frozen yoghurt is VAT exempt whereas ice cream is VAT able.
Nothing to do with luxuries.

You and @MisterChips are being deliberately obtuse about ‘top percentage’. It doesn’t mean specifically one percent, it means those at the top income levels, percentage wise. You can’t use 20% of sixth formers to suggest 20% of parents can afford it (though that’s still quite elevated income) because not all children stay on to sixth form. It’s 6 percent(ish) of children in education - and yes, ok, not everyone who can afford it does it (because it’s a luxury purchase and some choose other luxuries) but you don’t imagine more than say, 10% of families could afford it? There’s also some discussion to be had about how many families 6% covers based on numbers of children per family.

A sales tax largely levied on luxuries. Though I do agree some non-luxury things get it applied - but that rather supports it being used for private education, doesn’t it?

Plenty of “luxuries” aren’t subject to VAT. It’s not a tax on “luxuries”. A decent education is not a luxury. It should be a right for all children. In any case, parents have a legal responsibility to educate their children. Private schools meet that responsibility. VAT on school fees would be taxing something which is legally required.

https://guidetoindependentschools.com/key-independent-school-statistics/#:~:text=Some%2020%25%20of%20all%20UK,they%20are%20also%20a%20part).

Around 20% of 6th formers are in private schools, so clearly 20% of parents (less bursary students) can afford it. There’ll be others who could also afford it but who choose to use the state system.