As the coalition develops policy, one thought being proposed is tax deductible school fees so Liberal MPs it is being reported at canvassing a range of new tax agendas aimed at finding issues to resonate with you, the voters, to book them back into contention for government and revive Australia's lagging productivity. The PM at the Press Club today saying that this will be one of his major priorities in his term of governments to boost productivity Now. Ideas being discussed include making private school fees tax deductible while cutting taxpayer funding, lowering family tax bills by allowing couples to split incomes, and a fringe benefits review to allow workers in remote communities to pay their rent or their mortgage from pre tax income. Newly installed South Australian Liberal Senator le Of Blithe is working with the Parliamentary Budget Office on possible models of how to make private school fees tax deductible while cutting taxpayer funding. It joins me now on Perth Lively of Life.
Good afternoon, Good afternoon, Oliver, our own afternoon to your listeners.
What is the proposal you're working with the Parliamentary Budget Office about tax deductible school fees.
I think it's important to start with this is an idea. This is to start a conversation, and certainly I have requested some modeling from the Parliamentary Budget Office, but essentially what it is is at starting a conversation around how private schools are funded, and it's a look at how we can give parents the maximum amount of flexibility to be able to choose what kind of education system they would like to put their kids into, because I think when you've got parents who are choosing a private education, they're paying private school fees, but they're also contributing to the public system through general taxation. So it's just having a broad conversation to have a look at how we could potentially value the decisions parents want to make and see if we can make sure that we can give kids the best educational outcomes that they can possibly get.
So funding for schools in twenty twenty five, looking at the Department of Education's budget is estimated to cost about thirty one billion dollars, including almost twelve billion to government schools, ten and a half billion of Catholic schools and eight point seven billion dollars to independent schools. The work that you're doing at the moment, as you say, it is just policy in development. It's an idea may see that amount of money to Catholic schools and independent schools from the taxpayer be cut if the parents paying those fees to those schools were able to get a tax deduction.
That's certainly one part, one part of the modeling that can be done on that, and I think it's really important to note that, you know, it's also important when we're looking at that modeling that it is really carefully calibrated so that we're not just reallocating funds through the tax system in a way that is going to deliver higher benefit to say, high income owners or disadvantage low income owners. But that's certainly the idea, and then we could be looking at how we can support the public school system by taking that pressure off of the tax layer. So it is it is a very sort of complex thought, but one that potentially has the I guess a well designed framework might actually reduce pressure on our public education system, deliver savings to government, but also helps with the private sector to build up their numbers there if it worked that way.
So Joe's just sending a note saying school fees tax deductible. Definitely for us because we have no other school and choice. We only have a district high school near us, So a year eleven and year twelve, my son has to go to school. Now we're not rich, but we have to find that eight hundred bucks a week to send him to school. So it might help people in Joe's circumstances. He doesn't live in the metropolitan area Lea. If such a policy was able to be developed.
Absolutely, and there are lots of parents who are in that position. And this is part of starting these conversations because I think it's fair to say, you know, modern families work differently. If you are remote, you may only have private schooling options, or it may even be sending your kids into the city to boarding school to attend school. So this is really about, like I said, it's the flexibility for Terence to be able to choose any.
Other countries you are whereof who are offering tax deductible school fees Lea.
There are some jurisdictions who look at it's more of a voucher system, so where they will say we will allocate a child, you know, and I pick a number out. I'm not saying this is what it costs in Australia, but it might be twenty thousand dollars. And you can choose how you spend that voucher, whether it's in a public system or in the private system. There's obviously a gap in the private system that their parents make up in the public system that's essentially then free education. So that's another way of doing it. This is and I'm not saying that should be off the table or on the table, but it's one way that other jurisdictions are doing it.
One double three eight eighty two. Is this worth further exploration? Tax deductible school fees something that may be part of a policy overhaul here of the coalition. You're also talking about allowing couples to income split to be able to cut their tax Leah, how would that work?
So I think this is one where again families make different decisions, and I think with the income splitting, and I can sort of give you the example if you've got a household where you've got one partner who earns one hundred and twenty thousand dollars and another one who's earning forty thousand dollars at the moment we put that together and the couple are essentially earning eighty thousand dollars each. But what happens is is the partner who's earning one hundred and twenty thousand dollars pays tax on that you can't aggregate it now, and the other one who's earning forty thousand past the tax on their forty. What this would propose is that both would pay on the eighty thousand dollars, which actually leaves that family household better off under our tax systems. So it is really about leveling the playing field. There are families who make different choices. It could be, you know, to care for children. It could be to care for loved ones with a disability or special needs. It can even be for caring for elderly or aging parents. So families make different decisions about how they work or don't work. And this is really about, I guess, starting that conversation on how we are going to value those contributions that aren't necessarily in the workplace.
Yeah, and family structures very don't they. As you said before, you might have had multi generational households lea where you are a caregiver, So combining those incomes together, testing it on the fact that it's you know, with a couple as opposed to that income example, use of one twenty plus forty, it would come out that you have a few more dollars in your pocket to spend yourselves as a family unit, rather than giving it all up in your taxes exactly.
And I think that's really important. You know, it's pretty tough at the moment, families are struggling, and I think it's important we're having conversations around how we can ease that pressure on family households. And this is certainly one way where we can make sure that it doesn't matter whether you're living, you know, in a family environment or as a single that everyone is being taxed at the same rate for the same thing.
And there are policies like this I believe in place in some European countries, even in some parts off not all of the US.
Leah, the US does absolutely so, the US Italy, there are other jurisdictions that do this, and so it's something that as families have evolved and changed, the tax system has kept up. I think in this case, this is you know, a very worthy conversation for us to be having so that we're making sure that we're keeping up and really valuing I think for me this is very much around. You know, our personal income tax system isn't just about raising revenue. It's sending a message about what we value. And I think, as you know Australians in our communities, we should value that work that you know, whether it's mum, dad, aunties, grandparents, those care that care that we take of people within our community.
So the perspective or the leans you're coming at this from at the moment, Leah, is rather than looking at as it as perhaps personal income tax, it's how it benefits not just the individual but the family because family units obviously vary from household the households.
Definitely and it is really tough. I've got three kids, you know, very busy household and it's really important I think that we make sure that we're allowing families to make that decision on how they want to. You know, if you've got two parents earning income, that we should be doing everything we can to make sure that you keep as much of your hard earned dollars in your pocket and that the taxman's not just coming in and taking out what they can get. Life's tough enough without that happening.
Lee, I appreciate your time and the formulation of policy discussion begins in the rebuild of the coalition.
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