After weeks of government pledges to replace a hefty 23 percent VAT tax on private education with other measures, Education Minister Nikos Filis conceded today that the government will in the end have to honour its third bailout commitment to tax education.
In a frantic effort to temper the measure, the government will reportedly propose to creditors a system of three tax rates, which would apply to different categories of private education.
Day care centres, pre-kindergarten and kindergarten instruction would be entirely exempted from any tax. Private primary school tuition would be taxed at only six percent. Gymnasia and lyceums (middle and high school) would be taxed at a rate of 13 percent, while the ubiquitous private tutoring schools (frontistiria) that prepare students for university entrance exams would be taxed at six percent.
Once again, it appears that the government will try to temper a harsh austerity measure that it agreed to in July's third bailout programme in order to argue that it was able to improve an austerity measure that was imposed on it by the troika.
When the government first proposed the private education tax in July, it figured it would be able to raise 300 million euros in revenue annually. If the proposed multi-tier tax system were to be approved by creditors, the government reportedly will still have to come up with at least another 100 million euros in tax revenue, presumably leading to higher taxation in other areas.
The education policy centre of the Greek Confederation of labour in a recent study, however, estimated that the tax on private education will in fact yield a paltry 34.4 million euros in fresh revenues.
The education tax is one of 48 “prior actions” required by creditors in order to unlock the disbursement of a much awaited two billion euro loan tranche.
The government appears to have adopted a class-oriented approach to the education tax, looking to minimise the tax on private tutoring schools, to which even poorer families who send their children to public schools must resort in order to prepare their children for university entrance exams. In other words, they have no choice. It had geared up for a higher tax on private schools, where theoretically parents have the financial means to foot the tuition bill, and the extra tax burden as well.
“Private schools where wealthy citizens send their children is one thing. The frontistirio is something different. The situation with day care centres is different than that in kindergartens. We are seeking ways to lighten the measure,” Filis told a private radio station.
The government council on social and economic policy reviewed the various alternative proposals today and approved the three-tier tax scheme on private education. .
In statements earlier today, Filis had said that the 23 percent VAT tax on private schools will have to be implemented, as the government had committed to this in August.
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