Simplifying Tax Means Universalising Tax (Even for Private Schools)
12 June 2024
SUGGESTED
In the Media
Christopher Snowdon quoted in The Independent
12 June 2024
Economics
Julian Jessop quoted in The Sun & The Express
13 June 2024
Tax and Fiscal Policy
19 November 2024
Daniel Freeman writes for CapX
IEA Managing Editor Daniel Freeman has written for CapX making the case for extending VAT to private school fees.
Daniel wrote:
“Back in 1997, the average annual fee for a ‘day’ student in a private secondary school was £4,182. If average fees had risen in line with inflation they would now stand at just under £8,000 per year. In reality, they are now more than double that. Since 2009, fees have risen 24% in real terms.
“What has been the effect on the proportion of British children being educated in the private sector? Essentially none. In 2002, 5.98% of pupils in British schools were educated in the independent sector. By 2022, the proportion had actually increased very slightly to 6.05%.
“This is not a criticism of private schools. Increasing prices is a perfectly rational response to persistently high demand for a service. But it does make it tricky for independent schools to claim a fee hike will crater demand when they have spent a generation betting the opposite and being proved consistently right.
“The perennial problem for achieving free market reform is that people like being winners. If the state stops picking winners, for example by simplifying VAT, those affected feel hard done by. But if we listen to special pleading on the part of industries we are sympathetic to, it only undermines the case for broader reforms we need to simplify the tax system and boost growth.”
Read Daniel’s full piece here.
Daniel also debated Adam Smith Institute Director of Research Maxwell Marlow about whether we should levy VAT on school fees. Watch here.
Daniel wrote:
“Back in 1997, the average annual fee for a ‘day’ student in a private secondary school was £4,182. If average fees had risen in line with inflation they would now stand at just under £8,000 per year. In reality, they are now more than double that. Since 2009, fees have risen 24% in real terms.
“What has been the effect on the proportion of British children being educated in the private sector? Essentially none. In 2002, 5.98% of pupils in British schools were educated in the independent sector. By 2022, the proportion had actually increased very slightly to 6.05%.
“This is not a criticism of private schools. Increasing prices is a perfectly rational response to persistently high demand for a service. But it does make it tricky for independent schools to claim a fee hike will crater demand when they have spent a generation betting the opposite and being proved consistently right.
“The perennial problem for achieving free market reform is that people like being winners. If the state stops picking winners, for example by simplifying VAT, those affected feel hard done by. But if we listen to special pleading on the part of industries we are sympathetic to, it only undermines the case for broader reforms we need to simplify the tax system and boost growth.”
Read Daniel’s full piece here.
Daniel also debated Adam Smith Institute Director of Research Maxwell Marlow about whether we should levy VAT on school fees. Watch here.
SHARE
