VAT on school fees (you have to read this!)

[EverythingAllatOnceAllTheTime]

Government’s private schools VAT raid ‘could cost taxpayer £1.8bn’

Parents who are forced out of sector are likely to work less or even quit jobs, according to think tank research.

Adam Smith Institute.

Unfortunately it's not as simple as a sales tax, otherwise it would have been done before. AND, it would have been done by loads of other countries! It's such a brilliant idea, why hasn't it been done before ever? The UK is so smart!

The answer is it's actually a bad idea, examined as an option by countries with a range of political ideologies and this type of regressive tax has been rejected by everyone. Worldwide. Greece tried it at a similar rate, and backtracked, reversing the tax to a tiny sum. Why? Because it bankrupted private schools, flooded state schools with pupils they had no spaces or teachers or resources for, and education outcomes for all was severely affected. We already have an under resourced state education sector. It's bonkers to put additional pressure on it at short notice, with no plans in place. The same nonsense is going to happen here, and I sure as hell don't want state schools to fail even more, with more teachers leaving because they can't cope with even greater expectations. The VAT will generate nothing for the tax purse as everyone would have moved to state - so no tax, lots of extra students... How the heck are they going to pay for it all? It's a lie, it's destructive for both private and state, yet they get away with it because they have you convinced that the VAT is simply a sales tax for a luxury product. Pretty much a Brexit Boris bus all fucking over again. I'm just sick of it.

Education should not be taxed, end of. The entire European political experiment over decades of debate over EU policy, with multiple countries participating, determined that it must be protected from tax always. I side with these policy experts over this 100%.

The VAT is a stupid idea. But raising taxes to fund education is not, and is sorely needed. I would rather the govt focus on targeting the actual "wealthy", the ones hoarding millions in property and assets, corporations that don't pay billions of tax here. Getting a crumb from those pockets will generate billions more than this paltry tax. The VAT is really actually peanuts in light of the education budget. It won't fix anything but will break so much. They are targeting the wrong area as a source of tax.

She looked like she was having a bit of fun during a short break from the arduous task of running the country.

Fair enough, but if it had been a Tory MP the jeering would’ve caused mn website to crash.

1. Sales tax is an oversimplification. Howver, it is a tax on a large proportion of the goods and services we buy.
2. Other countries dont charge it on private education. Im well aware of this. In of itself this isnt reason that the UK shouldn't.
3. VAT rates in the UK are currently regressive. The poorest pay the greatest proportion of their income in indirect taxes. The policy wont fix that. It will just make it (very) slightly less regressive.
4. No one has convinced me VAT is a luxury tax. It very clearly isn't. We all pay it on everyday essentials - take a look at the lists they are freely available at gov.uk. For example, i dont consider the knickers im currently wearing 'a luxury'.

School fees should be exempt but everyday essentials shouldn't. This is what i cannot agree with. I understand others have a different view. It is about the fairness of the tax burden to me. We view these things differently.

Will the revenue gained be ofset by indirect costs/ramifications. Different people & organisations have different opinions. The truth is behavioural modelling is tricky. I think it will produce a very small net gain, but i cant be certain.

I think that there may be localised issues in children transferring, but measures such as bulge classes can be employed. Overall, there are surplus places. These issues are not insurmountable.

Nobody, least of all me thinks this alone will solve the problems in state education.

This

Quite

Agreed wholeheartedly on VAT in general being regressive in it's current application, and sorely needs an overhaul. It does penalise poorer households. There's a lot more that can be done to uplift the marginalised and disadvantaged in society, I'm just not convinced this current govt is going about it the right way.

I would also fully support what the govt was doing if they had done both detailed fiscal modelling as well as impact assessments before introducing this, so that everyone - schools, educators, local authorities, parents etc. could prepare for an enlarged state sector offering. But they have literally done none of this. Like, none. Zero planning. They quote a single IFS paper as proof that this will work. This paper is already almost two years out of date in terms of source data, and has so many caveats and assumptions, it's practically an opinion rather than a paper. Plus, it's since been challenged by other think tanks who say it's too risky, no money will be made. Most importantly of all, the govt themselves are refusing to do or commission ANY behaviour modeling of their own, which is so worrying to me.

So what's the point? We are all going to see an absolute shit show in state schools in metro areas, where the impact is greatest. There's no way anyone is prepared for this.

For the purely pragmatic reason that if the struggling single mum has to use the laundrette, it doesn't cost the government any more.

If the law was that if that single mum couldn't afford the washing machine, the government had to buy her one (albeit a more basic model) - and lots of people could only just afford washing machines - then it probably wouldn't make sense to charge VAT on washing machines either.

If a family chooses state school over private because of VAT, then the government becomes liable for the £4k-£7k per child which state education costs. If the child is in private school, their parents pay the lot.

People say that one more kid joining a class doesn't cost anything, and it's true that marginal cost is likely to be less than average per-child cost. Up to a certain point.

But where up to 30% of students are educated in private schools (eg Surrey, Edinburgh, Bristol) then I don't think you can fudge it on 'one extra pupil doesn't cost anything'.

And that's without the other reasons like increasing the education of a population being a public benefit (even more so than clean laundry) and that private schools allow parents to work more due to extended hours which grows the economy and increases income tax revenue.

No one really agrees at what point adding VAT to school fees starts costing the government rather than raising money due to having to educate more children. The main number I've seen is 10% of children who would have gone private instead using state school.

No one really knows how many children will use state school instead of private as a direct result of this tax. Personally, I think it's likely to be more than 10%. Note that whilst children switching is a short-term pain point, what matters for long term costs is how many families simply don't start private school due to the higher cost.

And why don’t other countries impose sales tax on education?

We would never have entered the private school sector in the first place if the state schools available to us had been able to educate my child. I find it baffling and deeply worrying that Labour doesn’t seem to have any plans to improve the state sector other than raising a tiny portion of funds from private school families.

@Brighton2025 I know for those who can’t see that. The DP raving in Ibiza is not an ok look how can it be she’is second in command

With this I agree.

Talk about tone deaf.

I think I am far more cynical than some others.

I do not believe there is a black hole. It is sold to us so they can raise taxes in an ideological way. There are lots of Labour MPs who disagree with WFA, in particular.
There are 2 train drivers in our school, they get paid shed loads and far more than many other people. Public transport in this country is embarrassing in most parts.
We should have scrapped VAT for tourists on UK luxury goods post Brexit as that would raise more money for the economy including for education and bring back tourism with a vengeance.
We are in some ways already a socialist countries in that people are not incentivised to work to their max capacity at every level of the income scale. We are nanny stated from cradle to crave and far too individualistic.

It is not inconceivable at all that some political advisor told Angela Rayner to rave, the raving Rayner so that she is seen as the more fun/exciting populist member of an otherwise droning drip cabinet that nobody believes in, because they are boring. Just as the poor woman wore a buffoon red dress to compete with Farage for attention in a debate. I have no idea what is going on anymore.

One thing I do know is that I would like to be much closer to the EU, not just for economic reasons, for so many reasons. Taxing education at 20% but not taxing flights which are terrible for the environment makes no sense to me personally.

Anymore of this nonsense, I sincerely believe I will move to Spain, Ireland or Switzerland and no, it is not for tax reasons. It is because I cannot stand the nonsense going on anymore. It has been years and years of it now, since Cameron. And this lot seems no better whatsoever.

BUT then I look at France and Germany and they seem to be having the same sort of crazy issues. So what exactly is going on?

Frankly, I'd rather my politicians danced in Ibiza than in lockdown......

The Tories are no longer in power.

Labour are - and it comes with responsibility, of course.

I don't mind politicians dancing at all! They are people too and they need a break and holidays (take note, Keir!). But they do need to do their jobs, especially if they have promised to have everything costed, feasibility tested, ramifications understood etc. And their one big education policy doesn't tick any of those boxes as they are refusing to release any of their own impact assessments on this. This policy has instead, enabled a weird rhetoric in public where attacking other schools and children will somehow fix it all.

And I'm with all the PP posters who were sick to death of the Tories lying and underfunding everything. I was hoping SO MUCH that this lot would be sensible about how they tackle the issues. But they are proving to be just as destructive as the last lot, especially with the elderly and the young (school children, both private and state).

@EverythingAllatOnceAllTheTime "Labour are - and it comes with responsibility, of course"

Of course they are. Of course it does.

The problem with them having holidays is what precisely?

Or is it just "common" holidays that's the issue?

"But they are proving to be just as destructive as the last lot, especially with the elderly and the young (school children, both private and state).

How? They are means testing a benefit that many do not need. They are closing a tax loophole. What are they doing to state school children?

Different countries make different choices. I cant speak for them. I dont make policy judgements on what other countries do.

I have no issue with politicians taking holidays.

The optics in Rayners case were less than ideal, coming after the WFA issue and Starmers rose garden piece, but there we are.

You sought to ameliorate matters but comparing it with Boris’s lockdown antics.

Boris is out. Government comes with privileges and responsibilities- one of which is scrutiny.

Evidently Rayner was comfortable with her actions.

The answer is they don’t. Wonder what the reason for that is?!

This policy is going to cost the taxpayer money AND disrupt the education of children. Great policy judgment.

There you go, same rhetoric. It's not a "loophole", but you insist on believing it is.

They are letting down state school kids by not properly funding the education system in ANY other way, other than a paltry VAT which will generate less than 1% of the education budget, if that. Literally NO OTHER FUNDING is coming the way of education. That's crazy! If they believed in it so much, why can't they raise far more money from other sources, sources that won't end up putting extra pressure on the thing they are trying to fix in the first place?? I simply don't get this at all. Even if they really insist on this VAT being the panacea of all things, can't they at least reduce risk by having multiple sources of funds to channel into education? But they haven't done any of that. Kids lose. We lose.

Why are you singling out indirect taxes? Yes, as a proportion of income lower income spend a greater proportion on indirect tax, but higher earners pay a greater proportion of their income in tax overall and receive far less in benefits/ transfers from the government.