What’s the problem with taxing private education?


In Greece, the real problem is that such a large captive market exists to be taxed – but most of the ongoing debate skirts around this fact.

One of the hot debating topics in the ongoing Greek election campaigns has been the imposition of 23% VAT on “private education” as part of the latest bailout agreement. The recently resigned government claim that they introduced the tax under duress from the country’s creditors, and that the alternative was 23% VAT on beef – the implication being that they chose to tax the elite minority rather than the carnivorous masses. The opposition has retaliated by claiming that this is part of an ideologically-motivated “war on private education”, that rather than taxing the wealthy the measure will affect the majority of families with school-age children, and that it will put thousands of workers in a “crucial economic sector” out of work. Cynics say it was just another clumsy tax grab to make up the numbers without putting our new best friends the French beef exporters’ noses out of joint. And of course since it is election time, it would be naive not to consider the element of vote trading (public sector teaching jobs vs. private sector businesses, the education vote vs. the meat vote). There is now a race to repeal this controversial tax, whether because of the 120,000+ strong petition against it, or because of a very public lack of support from the European Commission; but having staked out the positions, the debate rages on as the school year is about to begin.

The elephant in the room is this: “private education” in Greece is not an elite pursuit but a forced necessity; this much the opposition have got right, and this is why they are winning the argument so far. To use an English perspective, the market for private education in Greece is not the same as the aspirational middle class parents who send their children to St Paul’s or Westminster, let alone the toffs who get their heirs on the list for Eton. Only 5-8% of Greek children in primary and secondary education go to a full time private school. But up to 80% of school children at any given time get private tuition in foreign languages throughout their school years, and coaching in exam subjects in the final years of high school, either one-to-one (ιδιαίτερα) or at private tuition schools (φροντιστήρια), in addition to their full-time schooling. Private education is clearly not a luxury but an additional cost that parents feel obliged to shoulder to give their children a good start in life, regardless of their own economic ability and regardless of the children’s academic aptitude.

University entry results were announced last month, and the press partook of the annual ritual of interviewing the top entrants. Here is what the top scoring student in the country had to say about his study technique: “I went to the φροντιστήριο for several hours a week, because without it my knowledge would be insufficient, but I also studied many hours by myself” [my italics]. The necessity of the φροντιστήριο is tacitly acknowledged by the emergence during the crisis of “social” φροντιστήριο in many local authorities, staffed by volunteers, to help low income families keep up with the competition.

However, in the longer term a policy of defending the φροντιστήριο industry is just as wrong as taxing it, because it is both a symptom and a cause of bigger problems with public education. It is of course a vicious cycle. School teachers have learned to assume that their pupils are receiving out-of-school coaching (and many teachers in state schools “double dip” by offering out of hours tuition to supplement their income); the pace and the quality of their teaching reflects this assumption; all pupils, and particularly those who aren’t receiving private tuition, suffer from substandard and perfunctory teaching. School attendance in the pre-exam period has come to be regarded as optional, as the private tutors dictate the cramming schedule. This is just one of a number chronic problems that render the state system dysfunctional and inadequate for those who have no choice but to rely on it, and drive the minority who can afford it into full time private education.

The existence of a parallel education system alongside taxpayer-funded, constitutionally-guaranteed, universal education is so hard-baked into modern Greek life that it is entirely by-passed in this latest debate. Both sides are fighting over a 23% cut of a market that would not even exist but for decades of dereliction of duty by every shade of government. When it comes to the big picture, both sides have got it totally wrong. If you care about education and believe that it should be a public good rather than a commercial service, you should make sure you spend people’s hard-earned tax money on a working state school system – only then can you tax private education as a luxury. If on the other hand you think it is beneficial to provide choice and competition by allowing private enterprise to provide education alongside the state, it shouldn’t be at the expense of those who can least afford it.

Image: State school classroom after student takeover, from Mega Channel.

What’s the problem with taxing private education?

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