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Paying GST on education would be an unpopular but progressive move Paying GST on education would be an unpopular but progressive move
(7 months later)
The start of every school year involves a fair bit of trepidation for parents of those children starting their first year of school. And while they drop off their kids and wave goodbye at the classroom door, the parents might also feel some trepidation when they think about the costs to be paid over the following 13 years.The start of every school year involves a fair bit of trepidation for parents of those children starting their first year of school. And while they drop off their kids and wave goodbye at the classroom door, the parents might also feel some trepidation when they think about the costs to be paid over the following 13 years.
Thanks to the Australian Scholarships Group (ASG), those parents can now have a pretty good idea. And for some, it’s going to be a fair lump of money.Thanks to the Australian Scholarships Group (ASG), those parents can now have a pretty good idea. And for some, it’s going to be a fair lump of money.
The figures released by the ASG cover the cost of education from preschool through to year 12 in each state in government, Catholic and private (non-Catholic) schools. Not surprisingly, those parents sending their kids to private schools will be expected to pay the most. For children starting preschool this year, the ASG estimates it will cost $367,569 to put them through till the end of secondary school. That figure include fees, extracurricular activities, clothing, necessities and computer and internet access. The figures released by the ASG cover the cost of education from preschool through to year 12 in each state in government, Catholic and private (non-Catholic) schools. Not surprisingly, those parents sending their kids to private schools will be expected to pay the most. For children starting preschool this year, the ASG estimates it will cost $367,569 to put them through till the end of secondary school. That figure include fees, extracurricular activities, clothing, necessities and computer and internet access.
For those going through the Catholic system the cost is around half the non-Catholic school cost, coming in at $186,641. Meanwhile, those starting preschool this year at a government school can expect to have cost their parents around $57,455 by the time they get to the stage of wondering whether or not Dad will let them go to schoolies on the Gold Coast (speaking for myself, the answer will be, “no”) .For those going through the Catholic system the cost is around half the non-Catholic school cost, coming in at $186,641. Meanwhile, those starting preschool this year at a government school can expect to have cost their parents around $57,455 by the time they get to the stage of wondering whether or not Dad will let them go to schoolies on the Gold Coast (speaking for myself, the answer will be, “no”) .
If $367,000 sounds like a lot of money, the parents of that child starting preschool can at least be thankful they have not just given birth to a child this year. The ASG estimate that by the time a child born in 2014 starts school, it will cost up to $458,995 to attend a private non-Catholic school.If $367,000 sounds like a lot of money, the parents of that child starting preschool can at least be thankful they have not just given birth to a child this year. The ASG estimate that by the time a child born in 2014 starts school, it will cost up to $458,995 to attend a private non-Catholic school.
Over the next four years, ASG expects the cost of education to go up by around 25% for private schools, 23% for Catholic schools and 10% for government schools.Over the next four years, ASG expects the cost of education to go up by around 25% for private schools, 23% for Catholic schools and 10% for government schools.
While in the non-government schools the biggest increases in costs are expected in the secondary school years, for government schools, the major increase in costs is expected to occur in the preschool year.While in the non-government schools the biggest increases in costs are expected in the secondary school years, for government schools, the major increase in costs is expected to occur in the preschool year.
This increase in costs is not surprising, for over the past decade education fees have increased almost as greatly as any other household expense. Since 2003, only the price of tobacco as well as electricity, gas, water and sewerage have increased by more than the fees for secondary education. The fees for primary education come in as the eighth biggest price increase, with tertiary education just outside the top 10 in twelfth place. This increase in costs is not surprising, for over the past decade education fees have increased almost as greatly as any other household expense. Since 2003, only the price of tobacco as well as electricity, gas, water and sewerage have increased by more than the fees for secondary education. The fees for primary education come in as the eighth biggest price increase, with tertiary education just outside the top 10 in twelfth place.
If we compare various education expenses with other standard family expenses such as health costs, housing prices, rent and childcare, school fees rises have over the past decade generally outstripped them all.If we compare various education expenses with other standard family expenses such as health costs, housing prices, rent and childcare, school fees rises have over the past decade generally outstripped them all.
Not surprisingly, the price rises have also varied across the country. However perhaps surprisingly, Perth and not Sydney is the capital city that has experienced the greatest increase in such prices since 2003.Not surprisingly, the price rises have also varied across the country. However perhaps surprisingly, Perth and not Sydney is the capital city that has experienced the greatest increase in such prices since 2003.
While Sydney ranks second in overall increase in the price of education, most of that can be placed on the increase in the fees of attending tertiary education in Sydney compared to other capital cities. The price of primary education fees in Perth since 2003 have increased a whopping 113%, far outstripping the 83% increase that occurred in Adelaide and Brisbane in that time.While Sydney ranks second in overall increase in the price of education, most of that can be placed on the increase in the fees of attending tertiary education in Sydney compared to other capital cities. The price of primary education fees in Perth since 2003 have increased a whopping 113%, far outstripping the 83% increase that occurred in Adelaide and Brisbane in that time.
This increase in expense, however, brings with it more than just the question of how to pay for your child’s education. Choosing to send your child to private school remains a choice. No one forces you to outlay over $350,000. But because of the growth in private education over the past decade, and the increase in prices far in excess of overall inflation, education has grown in the level of importance in our annual spending. This increase in expense, however, brings with it more than just the question of how to pay for your child’s education. Choosing to send your child to private school remains a choice. No one forces you to outlay over $350,000. But because of the growth in private education over the past decade, and the increase in prices far in excess of overall inflation, education has grown in the level of importance in our annual spending.
In 2000, the ABS’s basket of goods used to calculate inflation had education spending accounting for 2.69% of the average household’s annual spend. By 2005, this had increased slightly to 2.73%; the latest weighting, calculated in 2011, has it up to 3.18%.In 2000, the ABS’s basket of goods used to calculate inflation had education spending accounting for 2.69% of the average household’s annual spend. By 2005, this had increased slightly to 2.73%; the latest weighting, calculated in 2011, has it up to 3.18%.
While this suggests we are spending more than ever before on education for our children (and ourselves), it also means that less of our money is being spent on items that are covered by the GST.While this suggests we are spending more than ever before on education for our children (and ourselves), it also means that less of our money is being spent on items that are covered by the GST.
Increases in the amount we spend on non-GST services – such as education – is the main reason why our tax base is said to be shrinking. In the first few years of the GST it took in just over 16% of all revenue gathered by the government. Now it only accounts for around 14%. That means the government must depend on the less predictable income and company taxes.Increases in the amount we spend on non-GST services – such as education – is the main reason why our tax base is said to be shrinking. In the first few years of the GST it took in just over 16% of all revenue gathered by the government. Now it only accounts for around 14%. That means the government must depend on the less predictable income and company taxes.
And as last week’s release of the 2013-14 tax expenditures showed, the exemption of education fees from the GST cost the government $3.3bn in revenue.And as last week’s release of the 2013-14 tax expenditures showed, the exemption of education fees from the GST cost the government $3.3bn in revenue.
Normally broadening the GST would be a regressive measure, however as is expected, the wealthier households spend more of their income on education than poorer ones.Normally broadening the GST would be a regressive measure, however as is expected, the wealthier households spend more of their income on education than poorer ones.
The ABS found that in 2009-10, while the wealthiest 20% of households spent 2.3% of their annual expenditure on primary and secondary school fees, the poorest 20% spent only 0.35%:The ABS found that in 2009-10, while the wealthiest 20% of households spent 2.3% of their annual expenditure on primary and secondary school fees, the poorest 20% spent only 0.35%:
Thus broadening the GST to include education would be a quite progressive measure.Thus broadening the GST to include education would be a quite progressive measure.
But it would also be deeply unpopular.But it would also be deeply unpopular.
Not only would the government have to overcome voters’ usual displeasure with any tax increases, the independent and Catholic schools would go on a warpath not seen since Mark Latham school’s hit list. It would also likely see the wrath of all sides of politics who would claim the tax was an attack on education.Not only would the government have to overcome voters’ usual displeasure with any tax increases, the independent and Catholic schools would go on a warpath not seen since Mark Latham school’s hit list. It would also likely see the wrath of all sides of politics who would claim the tax was an attack on education.
And so we shall continue to see school fees rise well above wages and other prices. As a result we’ll spend more than ever before on education, both personally and no doubt through our taxes. And all the while our tax base will continue to narrow due to that very expense.And so we shall continue to see school fees rise well above wages and other prices. As a result we’ll spend more than ever before on education, both personally and no doubt through our taxes. And all the while our tax base will continue to narrow due to that very expense.