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Greece became the second country in the world after Bangladesh to impose VAT on private education

29 August 2015 / 21:08:58  GRReporter
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Focused on the upcoming elections, the government of SYRIZA and the Independent Greeks made a U-turn and started seeking ways to postpone the imposition of the 23% VAT on private school fees. The decision for the latter was taken in July. Since then, more than 100,000 signatures were collected from parents or grandparents, among others, protesting the additional taxation on private schooling, which will weigh down school fees with up to €2,000 per year.

Yesterday, the European Commission, in response to a query by New Democracy, said that the imposition of indirect taxes such as VAT on education runs counter to the Community directive.

Therefore, the New Democracy President, Evangelos Meimarakis, demanded that the caretaker government decree the postponement of VAT on tuition fees. Worldwide, Bangladesh is the only country with indirect taxes on education. Just like Greece, the Asian country took this decision back in July. The only difference between the two is that Bangladesh slapped on a 7% VAT versus the Greek one of 23%.

VAT will affect retroactively the fees of private schools, colleges, vocational training and lifelong learning centres, conservatoires, etc. The imposition pushes a number of private educational institutions to the brink of bankruptcy.

Most importantly, it will put an additional burden upon hundreds of thousands of Greek families, and especially on their children schooled in these institutions. It should be emphasized that introducing VAT on private schools was initiated by the Greek government rather than by the creditors.

According to Kathimerini, until yesterday, before handing over to the caretaker government, the economic team of Tsipras' government had been trying to freeze its way out of the tax. Of course, a freeze would imply finding equivalent fundraising measures in agreement with creditors. According to an audit office report, private school VAT was expected to bring revenues of €168 million in 2015 and €240 million in 2016 and thereafter.

After the European Commission's reply, Meimarakis proposed that the caretaker government freeze the decision. The Potami MPs, Harris Teoharis and Georios Mavrotas, demanded the revisiting of the decision. According to them, "the VAT imposition will backfire in financial terms for its negative effects on the education sector." Evy Christofilopoulou, in charge of education at PASOK, also came up against VAT on private schooling as thousands of students will be forced to suddenly change their schools.

Yesterday a meeting was held at the initiative of Konstantinos Michalos, president of the Union of Hellenic Chambers of Commerce and Industry and of the Athens Chamber of Commerce and Industry. It was attended by representatives of private schools. The meeting decided to set up a committee to put pressure on the government. Help will also be sought from competent European authorities.

Tags: private schools VAT freeze
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