Why are Labour and Phillipson shutting down democratic debate?

[Another76543]

Yet again, another petty social media post about private schools. I understand that many people disagree with private education. Many people agree with it. Why are Labour trying to stop democratic debate around this policy which disrupts the lives of many children? Her Facebook page also appears to be removing any comments she doesn’t agree with.

If you truly believe in something, have some backbone and stand up for your principles. Don’t try to silence those with a different opinion.

The post also shows a serious lack of comprehension of the tax system. This has nothing to do with tax on private schools; it’s a tax on parents. It’s the parents, not the schools, which have to pay any VAT.

For some reason, the Labour Party don’t want scrutiny of any kind. They don’t want this policy questioned. I assume it’s because they realise that the numbers don’t add up and don’t justify their actions.

Another poster has explained some of the 'facts'. I was just repeating what I read in the media. Although, according to my reading, no-one can predict how things will actually pan out, fiscally. Not the IFS, the Treasury, HMRC, the Education department, Rachel Reeves, Bridget Phillipson or Keir Starmer. The lack of analysis, costing, impact statements etc etc have ensured that.

If anyone came to me, now, and asked for my input on an 'Impact Assessment', I wouldn't be much help, either. I don't know what I'm going to do, myself... We could relieve ourselves of the financial burden and take our kids out of their private school at the end of the academic year. The only way to secure complete continuity of education for them would be to send them to the nearest local state school with in-year places. It would be hard to justify sending them to a 'cheaper' private school because what happens if that school closes, six months in, because too many kids leave it and it can't survive? Similarly, if we leave them where they are (and remortgage the house to pay for it) what happens if that school closes, twelve months from now, because too many kids leave it and it can't survive? Answering my own question, the safest move would be to send them to the local state school and bank the money... And we're back where we started: every child that migrates costs the govt...

I read somewhere that 'VAT on private school fees' has been on and off the Labour Manifesto for 50 years... But no-one has ever been brave enough to actually do it. I can see why now.

That expression, 'Why let the facts get in the way of a good story' wasn't directed at you, personally. It's been around, as a saying, a lot longer than I have. I meant it more about the Labour Party.

@Another76543 VAT is a regressive tax so it has more impact on those with less.

Removing the winter fuel allowance has had a greater effect on those with less. A £250 reduction to a pensioner on £12k a year is going to be impacted much more than the same reduction for someone earning 10 times that amount.

The difference with the standard rate of VAT is that the more you spend, the more you pay. For the poorest in society, for those using food banks etc, I can’t imagine they’re spending much, if anything, on goods and services subject to the standard rate of VAT, which tends to apply to non essentials.

Proportionately VAT is a higher percentage of a low paid person’s income than that of someone who is higher paid. In absolute terms someone who earns more pays more in VAT but it is a lower percentage of their overall income.

That's a common trope that VAT is regressive. Maybe it is, but the devil is often in the detail so maybe it isn't.

I'd love to see a genuine breakdown, which also includes other forms of tax such as IPT for insurance and APD for flights - which replace VAT.

Accommodation, non-luxury food and transport are all zero-rated. So are children's clothes. These make up a pretty high proportion of spending for someone on low income.

Savings obviously won't attract VAT, but then you'll pay VAT when you spend it. So it's deferred rather than not paid.

Is a higher proportion of what lower income people buy really the type of discretionary goods which attract VAT (or other tax) than higher income people? What are higher income people spending their money on, that doesn't attract VAT or other tax?

It seems that VAT is actually slightly progressive in the UK.

https://ifs.org.uk/sites/default/files/outputurlfiles/09chap10.pdf

It's regressive as a proportion of income because income varies over your lifetime. So eg when someone is out of work for a short time, they keep spending - so their VAT as a proportion of income is very high at that time - then pay back the debt later. Conversely, someone earning more might save some of the income (lower VAT compared to income) and then spend it later when their income is lower. But they're still paying VAT when they eventually spend it.

So it's more useful to compare VAT as a proportion of spending at different income levels. And as expected, due to VAT zero-rating and exemptions it's progressive. Higher income people pay more.

I can't see it on this thread, but someone recently suggested that our overall tax system is regressive. I looked it up since I was surprised, and that's another false trope.

https://ifs.org.uk/taxlab/taxlab-key-questions/where-does-government-get-its-money

45% of government income comes from Income tax and NI which together are highly progressive.

17% comes from VAT, which as the IFS paper shows is slightly progressive.

11% from corporation tax, which I'd expect to be roughly neutral, similar to VAT in countries without VAT zero-rate/exemptions.

4% Capital gains tax which is highly progressive, same as income tax.

I'm not clear on the progressive/regressive nature of the remaining 21% (business rates and council tax, other indirect taxes, other taxes and royalties). Some parts of this 21% (like IHT) will be highly progressive. I think overall this 21% is unlikely to be very regressive, and probably overall neutral to progressive.

So overall our tax system is highly progressive, with some elements moderately progressive/neutral.

@strawberrybubblegum Thank you, that was very interesting.