To not see how the gov will make any money from taxing private schools?

[AngryHedgehog]

All the other threads seem to have descended into bunfighting over the ethics of the policy, yet I'm not really understanding how this stands to benefit the government as surely they'll be footing the bill for all the kids that move to state schools?

As a disclaimer, I don't have kids and wouldn't be able to afford to privately educate them even if I did, despite earning a half decent salary.

I'm reading that it costs around £7k per pupil per term, so it would take the VAT from around four families to fund each additional child moving to state education.

Given that this may be 4/10 kids in private education moving to state schooling, I don't see how this doesn't create a net loss as there will only be 50% more kids left in private education and there needs to be multiple times that for the VAT increase to foot the bill.

Surely I'm missing something here?

Who said anything about struggling or choosing between heating or eating? If there is not enough money left after paying for all essential living costs plus school fees to cover the VAT, there isn’t enough money. People can’t magic up some extra if they don’t have it. And what you seem to be saying is that because some people in our society are suffering with the cost of living crisis you want to make other people who you perceive as rich suffer too. Or rather, you want their children to suffer.

And, no I’m not wrong about the income variation at private schools because even if you look at the top ten per cent of earners in the UK there is a massive difference between someone who is on £60k and someone who is on £multi millions. The top ten per cent band is very, very wide.

What PP seems to be missing is that whilst many households of Private Educated children may be able to afford the increase through extra belt tightening/remortgaging/etc., they won’t want to. The cost to the family changes the value of private education vs state education so they will decide to move. They may hold off until a break point before moving to state, or reconsider how much private education to buy (eg only secondary, or only primary to get into a selective state school). It is not just about whether you can afford to pay for VAT by giving up cars, extra curricular activities and modest holidays and it is irrelevant whether you think they should.

"you want to make other people who you perceive as rich suffer too. Or rather, you want their children to suffer."

Strawmanning hard here eh?

You said that you were struggling because of the cost of living crisis, you really aren't. I made the point about heating or eating because THAT is what people who are struggling do.

And yes, you are wrong about the income variation in private schools, it is DOMINATED by those in the top income decile. Why would the % of children privately educated be close to 0 in each of the other deciles if there was a large amount of variation in income?

@Sloejelly

Strange that everyone else has to cut their cloth accordingly and factor in how much things cost when discretionary spending.

You are right, people don't want to pay the extra. They will though, and no they won't move schools, no they won't drive house prices in good catchments up, and no they won't leave the country.

It really is just performative flouncing by a very, very privileged group who want to protect some of their privileges.

you are wrong about the income variation in private schools, it is DOMINATED by those in the top income decile

This betrays a very basic misunderstanding

Behaviour changes all the time. Look around you at ways small and large taxes impact behaviour

Or how messaging does

You are missing a lot of the reality

Well why are you talking about heating or eating? What does that have to do with parents having enough disposable income left over to pay the VAT after they have covered their essentials?

Where did I say I was struggling? You made that up. I said our costs had increased massively so back in 2019 we could comfortably afford the VAT but are not in the same position now. I didn’t once say that we couldn’t afford our current commitments.

@EasternStandard
"You are missing a lot of the reality"

I'm really not, you keep repeating the points about taxes changing behaviour but ignoring PED.

Come on, if you are going to use economics do it properly.

@Sloejelly , If it is not about Charity Status but a new Law is brought in that will look as if the policy is driven by envy, I suggest.
It would be a great pity if a government were to prioritise making difficulties for the schools that specialise in the arts to operate. The Dance and Theatre schools, the Cathedral Schools, Chetham's in Manchester which is a truly first rate World Class music school.
For so many of the subjects it is imperative that learning and training starts very young.

@Dibblydoodahdah It was you that made reference to people not being able to afford things due to the cost of living crisis, my point is that, no, you and other private school parents aren't really "struggling" because of it, you may have had to make some decisions regarding your discretionary spending.

I didn't say you couldn't afford your current commitments either.

You'll pay the tax, you just don't want to.

Ok then, if we are on the basics of economics can you explain how the income in the top decile is NOT hugely variable when it ranges from £67,000 up to £millions?

And while you are at it, why do you think the Laffer curve does not apply to this particular purchase decision.

@Sloejelly

Because the vast majority in the top income decile of households are significantly over 67,000 as the average income for this group is 196,000 a year.

65,000 puts you in the top 10 % of earners, not household incomes, to even enter this group you need over 100k in household income ( assuming 2 parents and 2 children).

But I never said anything about struggling. I said some people won’t have enough income left to cover the VAT after they have paid their basic commitments (mortgage, bills, etc) because they have increased massively since this policy was first mooted. You were the one that used the word struggling and then went off at a tangent about the choice between food and heat.

And no I don’t want to pay it. I believe it to be grossly unfair but that’s not the issue we are talking about here. I said that some people wouldn’t be able to afford it which you are denying.

Not just them, also specialist schools that educate disabled children. several pp have made noises about how these children will be exempt but no one has been able to explain how that would apply across the uk.

@Sloejelly

Because the Laffer curve is a simplistic model which doesn't have any statistical evidence to back it up ( or the stuff that does shows that the point at which behaviour changes is much higher than Laffer and others have assumed.)

Also the Laffer curve refers to income taxes, not indirect.

" I said that some people wouldn’t be able to afford it which you are denying"

I didn't say that they wouldn't, I said that the vast majority will pay it and it won't make a difference, many will be able to pay it with a few changes.

It’s horrible, isn’t it? I’ve been on the private kids not allowed in grammar schools thread and the comments about the actual children are awful. I haven’t seen the other thread but the same principles apply.

Ok. Household incomes them. Using your figures, you state you have to earn over £100k yet the average income for this group is £196k. For a start, when you say ‘average’ are you using mean, median or mode? Mean would clearly not be appropriate given how skewed the data is. But in any case given the difference between your category entry point and average is almost as big as the range of incomes for that of deciles 1 to 9 combined I completely fail to see how you can possible claim income in the top decile is not highly variable.

@Sloejelly Thanks for your reply, I had forgotten about schools specialising in Special Needs that you describe. I was not aware of any that are Private and not run by Local Authority.
I guess we have to wait for the Manifesto.

Taxes change behaviour all the time

Small amounts change behaviour in every day life, maybe you can think of some

"Taxes change behaviour all the time"

Indirect taxes changing behaviour depends on PED, as any fule kno :)

Yes a large number are independent and run by charities, they can cost over £100k pa and fees are generally paid by local authorities. Pp keep mentioning EHCPs but VAT applies to the whole of the uk and EHCPs only apply to children living in England.

" I completely fail to see how you can possible claim income in the top decile is not highly variable."

Because when you use this phrase about being highly variable you do so to make out that there are lots very ordinary earners/households sending their children to private school. As they are almost ALL in the top income decile this isn't true, there may be variations in how well off they are, but they are almost universally all in the top income decile.

I recall an economist talking about the fixed model over the dynamic model for tax receipts

He made a good point re modelling and behaviour change

I don’t see how anyone can be so certain on how fixed this is, you’d not go far if that was actual advice - rather than just high confidence on mn