GST should not be applied to the cost of education which is an essential public interest investment

INVESTING in the education of young people remains one of the most important duties of any government.

In recent times, Australian governments have overextended their budgetary constraints, leading to persistent Budget deficits and significant growth in public sector debts. Fresh calls have been made by groups such as the Australia Institute to increase revenue mainly through the taxation system, including by broadening the Goods and Services Tax (GST) to include school fees.

It is important to review how services provided by governments are funded and delivered and the recently released Australian Government discussion papers Re:Think – Tax, and Reform of the Federation, put the funding and delivery of school education on the agenda.

Any broadening of the GST base to include household spending on education would amount to a lopsided tax on school choice and be a totally inappropriate imposition on human capital investment.

As argued by leading economist Dr Mikayla Novak in an Independent Schools Queensland-commissioned discussion paper, Taxing our Future: Implications of Imposing Extra Taxes on School Education, the revenue raised through a GST on school fees would be outweighed by the cost of educating more students in the public system, leaving the states and territories about $546 million a year worse off.

The increase in school fees from applying the GST would give some parents of non-government schoolchildren no choice but to transfer their children to government schools. This is estimated to be nearly 10 per cent of the more than 250,000 students currently attending non-government schools in Queensland, and would result in increased education costs to governments and reduce the number of parents investing in school education from their after-tax income.

It could be expected about 22,700 students would move from non-government to public schools in Queensland as a result of a GST-driven fee increase and this would result in an additional $106 million cost to the State Government for public education over and above the GST collected.

A GST on school fees would be a significant challenge for many independent schools, particularly smaller schools many of which are in regional, rural and remote locations, or meet specific needs such as for students with disability or in need or additional educational assistance.

Already, Queensland parents provide 50 per cent of funding towards independent schools.

Taxing independent school fees would be a further inequity for these parents. Many already face heavy cost pressures and make significant financial sacrifices to support the education of their children. They already save the taxpayer hundreds of millions through cost savings in public education.

In the interests of continuing Australia’s long standing and vital investment in the education and skills development of young people, it is essential that any moves to broaden the GST to school fees are rejected.

David Robertson is the executive director of Independent Schools Queensland.