IPPN

25th January 2007 - Helping the local school may be another stealth tax

Helping the local school may be another stealth tax.

How?

When you donate €100 to your local school by helping the sponsored walk, you may, inadvertently, be paying another stealth tax. How?

Well this money you give has already been taxed, so you will have already given at least €25 to the exchequer in order to have the €100 to give to the school.

Then, when the school spends this €100, €21 of it goes back to the exchequer in the form of VAT on whatever the school has purchased with it.

So, for every €100 the school raises through fundraising, the exchequer gets anything from €46 to €91 - depending on your marginal rate of tax.

IPPN estimates that primary schools pay for up to 50% of their normal running costs by fundraising. This was one of the findings of their recent survey of Principals on school funding.

There are 450,000 children in our schools, Approx €100 per child has to be found each year to keep schools running. This is €45M every year which you, as parents, grandparents, uncles, aunts and neighbours, give to our schools when you support the Cake Sale, the Sponsored Walk or the Christmas Fair.

Let's say that this comes from earnings which have paid tax at the lower rate, then this €45M has already contributed €9M to the exchequer and will go on to contribute another €9.45M in VAT when the school spends it.

So, not only does the state expect you to fork out the €45M that is needed, it also earns another €18.45M from you when you bail out your school.

This is a sneaky stealth tax which thrives on the generosity of parents and the wider community towards primary school children.

And, by the way, the next time you hear of some initiative announce by government for primary schools, just remember that while €1 million sounds like a lot, what you actually have is €2.22 per child. And for every million the state gives to schools, €210,000 goes straight back to the exchequer in VAT.

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