Proposal to make Education subject to VAT

I've just spied a poster in work about this today. Apparently PASE are going round all the private schools, getting them to put up posters and handing out petitions to be signed against a proposal to remove the VAT-exempt status from educational establishments. I haven't had time to check thoroughly what the proposal is, but it seems that private schools are going to be hit and hit badly by this.

The one good side seems to be that it will make small schools much more competitive if the VAT registration ceiling is increased to 150k like has been proposed - someone running from a two/three room school in the centre of a city will be able to offer courses for 20% less than the big schools.

But this could dramatically impact upon salaries - there's just no way that the market will be able to take a 22% increase in prices overnight, given the amount of competition there is at the moment. To that end, labour costs are going to have to fall - and may even make public teaching an attractive prospect for many young graduates.

Any thoughts?

I think it will just change the way a business sets up. There are always loop holes.

Would that be 22% VAT if it is to take effect? I would expect 7% like most other "services".

PASE are claiming 22% - I haven't actually seen anything but the posters they've been distributing, so I'm clueless.

If you ask me, they would be far better off investigating the whole setup of 'education' providers rather than simply slapping on VAT. I don't think it's exactly a big secret that many language schools are fiddling their taxes.

They should slap VAT on but you'd quickly find language schools finding excuses to drive the rates for their teachers down.

Delph, nice idea but it just doesn't happen. They have all manner of investigatory bodies who do diddly squat. PiP, the Kuratorium and other bodies have been charged with checking work practices and ensuing compliance but they have been allowing schools to cheat in more ways than one.

Put VAT on as a surefire measure!

Any further news regarding this? I've heard nothing...

The latest proposal is (as far as I remeber off the top of my head) for accredited courses to be VAT exempt from 2011, with all other courses charged at 22% VAT. Of course, part of the system of accreditation involves actually having to run the course for a year first - which creates the nonsense of charging VAT one year and then not the next, which is absolutely absurd.

How did it all end?