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.

Do you have Labours numbers for the supposed net gain to public finances, resulting from the imposition of VAT handy?

You could always ask New Zealand?

I doubt any of the strong proponents of the VAT on private school fees actually believes there will be any proper money generated from it. They just have an old outdated piece of paper from the IFS to wave at the OBR, hoping it gets through. But the policy itself is entirely to harm the institution of private schools.

It was like the fox hunting policy in 1997. It was to get at the Toffs, a symbolic gesture. My kids all had to debate the pros and cons of fox hunting in Year 2, seems it has made its way onto the National Curriculum. It is the first time I introduced them to the notion of populism and manipulation by politicians. They, of course, just felt very sorry for the foxes.
Strong Proponents of VAT on school fees do not feel sorry for private schools kids, because most believe fundamentally that the kids will be better off in state schools and that they are doing you a favour. They are saving your children, just like the foxes were saved.

I think that this illustrates a central difference in how different people view taxation and provision of public services. I want a society where everyone has universal education partly because i think education is an important right and partly because an educated workforce is needed for a functioning economy, services and society. I wouldnt expect a tax exemption because i dont use a particulsr public service.
We dont currently receive reduced tax rates because we dont use particular public services (state schools or anything else). Your argument about the washing machine only makes economic sense if the overall gains in VAT on private schools are ofset by the increased expenditure on children moving sector and other knock on impacts. I think we both agree that we dont know for sure yet how this will pan out.
However. to me things are about more than the raw economics. The poorest 20% paying over 25% of their income in VAT & other indirect taxes whilst private schooling a service bought mainly by higher income families remains exempt. I think is a situation that is regressive & inequitable. Others disagree - we have dufferent views on things.

This.

I come from a standpoint where taxes should vary according to income and wealth. A progressive view where those with more & earning more pay more. I dont think those on lower incomes should pay proportionally more of their income for any type of tax. Even when taxes are progressive higher earners stlill have higher net incomes. I am therefore in agreement with higher income earners paying higher income taxes. I also think that indirect taxes shouldn't be regressive with lower incomes paying a greater proportion of their income.
It is a political and social view. Others differ and there have been attempts to introduce flat tax rates for all (e. g. the poll tax). Progressibe tax rates is just the way i think we make things most equitable. We all have different political views.

@Owlbookend - we have sufficient data on how rich people behave when you introduce an unfair tax on them, let alone when it is their children. They adjust their behaviour to recoup. The 50% tax rate was a recent example. So just those moving kids to state will only be one way they will adjust their behaviour - they will cut charitable donations etc to all charities- they will move kids from boarding to day etc./to cheaper private schools, they will emigrate, they will tax plan around IHT, they will raise rents on their tenants. The money will not be generated by them through additional working hours. The only way this policy makes economic sense is if all these 40 and 45% tax payers work extra to cover the VAT. In every other way, the cash is lost in the economy (unless you are somehow hoping it is just a question of foreign holidays being scrapped - even then, it impacts tour operators).
We absolutely do know that overall, holistically, this policy will bring in less than it will make. The real damage is to small local economies, teachers in the private sector and SEN students, local contractors etc.

Just when you think the debate couldn't get any more ridiculous and out of touch, now we have fox hunting.

This. Don’t forget grandparents

Someone I know is gifting a £1m a year generating property portfolio to his gc via a trust. It will pay towards private school, uni, house deposits - the works - and the amounts have been carefully adjusted to account for tax. Prior to this they were paying taxes on the income.

I think we'll just have to agree to disagree. Ive devoted far to.much time to this thread today already.
You are sure there will be no net revenue gain - im more equivocal.
Fairness and equity are interpreted differently by people from different social & political perspectives. Im guessing yours and my political views are different. I accept others have different perspectives on what is fair. I can only express mine and the reasons that underpin them.

Nice try @CeruleanBelt - essentially, when a society has not been at war with an external enemy for a really long time, it invents internal enemies. Previously it was the Polish or Romanian migrant which brought us Brexit, now it is the private school parent etc.

Whilst fox hunting was symbolic, this goes far deeper as it involves school children. It is so below the belt, it is not even funny. Although I suppose it will make for fascinating research by other countries in years to come. Laughing stock Britain and so it continues.

I honestly dont know why i get drawn in. I dont t think anyones views are likley to be swayed. I think it s partly because i want to counter the view that it all comes from a place of envy, hate or animosity (to any parents ir children) Rather than from a different social view. Anyway off now to do some rather mundane household chores.

@Araminta1003 "I doubt any of the strong proponents of the VAT on private school fees actually believes there will be any proper money generated from it. They just have an old outdated piece of paper from the IFS to wave at the OBR, hoping it gets through. But the policy itself is entirely to harm the institution of private schools."
I absolutely disagree here. I don't think it will harm the institution of private schools at all. There will be a few parents priced out. But it will be a few. And places will quickly be filled in the good schools.

Apologies for the random italics!

@CurlewKate - you are assuming that people choose private schools for ideological reasons primarily. Which I doubt is the case. I assume people choose private schools because they happen to be better than their local state options or they can’t be bothered to move into a better catchment (or it does not make financial sense to do so) or their child has SEN etc and failed in the state system or everyone in their family went and they feel they have to send their DC too etc. You are assuming people are not making a carefully weighed up financial decision when choosing a private school. I mean how could anyone be going into private schooling without weighing it up carefully now? Many private schools are as of Jan 2025, going to be up to 25% more expensive than Jan 24, and into a cost of living crisis, high mortgages on top of that, I just do not see it happening, that only a small minority are affected. And as I said, I think even those who could afford the VAT, they will make different choices if they feel singled out by it. Which seems to be the case, judging by MN. I mean we had the endless Covid threads and the endless Brexit threads and now we have these endless school threads, So there has to be something in it?

For those of us who are neutral ideologically speaking either way on private schools and we just see the economic argument and we see the quality argument (is it so much better than my state school and could I afford it etc) - for those of us who genuinely at some point considered the two - the argument is going to be different. I never thought no way private, no way faith, no way grammar, no way comp - none of that ever came into it for me. It was always about finding a good sensible option for my own DCs weighing everything up, in a balanced way for us as a whole family. I appreciate having the choice is a massive privilege.
As it is for the vast majority of my friends, family, colleagues and even in our local state schools. There are plenty who could have gone private but moved into catchment instead or went to grammar, having weighed up their options. Ideology does not come into it for the vast majority of these people.

Then you should be advocating for the abolition of vat rather than its expansion? Any consumption based tax is going to hit lower earners disproportionately as a percentage of income, and that includes VAT on private school fees. People of all income levels send their children to private schools and the fact that wealthy deciles buy more of it is irrelevant in this line of argumentation - the wealthy us more of most vat-able goods and services.

That's coming from the assumption that banning fox hunting was to stick two fingers up at the upper classes. It wasnt.

Lots of people who aren't upper class used to hunt, and still do. It was rightly banned because chasing a terrified fox with dogs which will rip the fox up into tiny pieces for the entertainment of humans has no place in modern society.

I'm still bemused as to what any of that has to do with VAT on private schools, unless it's because private schools should also have no place in modern society.

Well @CeruleanBelt - perhaps in the future, our KS1 and 2 children will be debating this same issue in state primary school.

If the debate on fox hunting were so clear cut, then why is my 6/7 year old asked to debate it in a balanced manner in class? Is Labour going to scrap that of the curriculum? The teacher divided the kids into 2 camps and they had to be able to debate both sides.

It was rightly banned because chasing a terrified fox with dogs which will rip the fox up into tiny pieces for the entertainment of humans has no place in modern society.

If it was banned on grounds of animal welfare then why haven’t factory farming, shooting and fishing been banned?
Whether it’s for entertainment or not is all the same to the animal, bird or fish.
Of course it was on class grounds - one MP admitted that.

If it wasn’t about class, why would trail hunting be on the menu now? Will KS1 teachers have to teach that in the debate too? What are they going to be telling our children about class and culture wars?!!!

You've quoted my post, and then said you disagree with lots of things which I didn't say.

You say "We dont currently receive reduced tax rates because we dont use particular public services"
But I didn't use that as an argument

My argument is purely pragmatic, around how people will change their behaviour. They currently don't use that service, and so the government doesn't incur that cost. If they choose not to use private school, then the government will incur the cost.

You recognise my argument about the washing machine only makes economic sense if the overall gains in VAT on private schools are ofset by the increased expenditure on children moving sector and other knock on impacts

But they will be offset by those expenditures and knock on impacts. How could you imagine that they won't be? Even if the net gain isn't zero or indeed negative, do you really think it's an effective way to raise that money?

Don't lose sight that the point of taxes is to raise money! So whatever your viewpoint is on who should pay how much tax: do you think this is the most effective way to get the maximum money out of them? It is surely absolutely self-evidently obvious that it isn't efficient - simply from the significant extra state education costs incurred.

I'm not too sure why I keep getting drawn into these discussions either. It's just so obviously harmful to everyone in the UK - and in a way that won't be reversible - that I can't help shouting 'we're about to crash!' Shouting into the wind, I know.

That is a very good point about factory farming.

That is much more horrifically cruel to the animals involved: and the numbers are much, much bigger. No government dares address that though. I wish they would!

We can turn this into a fox hunting debate if you want. Still not clear on why you think it's relevant.

Yougov polls show 80% of adults in the uk support the ban on Fox hunting.

A recent yougov poll said 49% think private schools should lose charitable status and should not be tax exempt. Only 14% think private schools should keep their exemption and charitable status.

You're in a tiny minority already and falling back on the fox hunting ban as being a Bad Thing isn't going to win you many supporters.

Why aren’t balaclava’d sabs not protesting outside battery hen farms and salmon farms? (Salmon farms do appalling damage to the environment as well as causing suffering to the fish).
Because there aren’t any toffs to bait.

CeruleanBelt · Today 13:42
We can turn this into a fox hunting debate if you want. Still not clear on why you think it's relevant.

If it’s so irrelevant why did you mention it?
I disagreed with you that it’s not a class issue.