Arthur Morgan (Louth, Sinn Fein)
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Question 100: To ask the Minister for Education and Science her views on the fact that nearly half the State's private fee-paying schools are claiming to be charities to avail of tax exemptions; if she will withdraw State funding for these schools; and if she will make a statement on the matter. [6768/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The issue of tax exemptions is a matter for my colleague, the Minister for Finance. However, I understand that those primary and post-primary schools that have been granted charitable tax exemption by the Revenue Commissioners under section 207 of the Taxes Consolidation Act 1997 were granted the exemption on the basis of their charitable objects and purpose. The matter of whether they are fee-charging schools was not a consideration. Approximately 420 primary and post-primary schools have been granted charitable tax exemption.

Since 2001, all primary and post-primary schools providing education based on a programme prescribed or approved by the Minister for Education and Science automatically qualify as approved bodies for the purposes of the donations scheme under section 848A of the Taxes Consolidation Act 1997. There are approximately 4,000 such schools in the State. The schools do not have to be charities to qualify for the donations scheme.

Any consideration of the funding arrangements for fee-charging secondary schools should take account of the historical context that gave rise to the differentiation between these schools and non-fee-charging secondary schools. This differentiation arises essentially from the arrangements put in place when free second level education was introduced and those arrangements took account specifically of the position of minority religions with dispersed membership through the creation of the block grant.

As the Deputy may be aware, there are currently 56 fee-charging second level schools, of which 21 are Protestant, two interdenominational, one Jewish and the remainder Catholic. Fee-charging schools, with the exception of the Protestant and Jewish fee-charging schools for which special arrangements apply, do not receive capitation or related supports. I referred previously to the block grant by way of which Protestant fee-charging schools receive funding. The block grant has its origins in the desire of the State to enable students of the Protestant and Jewish persuasions to attend schools that reflect their denominational ethos and it includes payments in respect of capitation.

It would be inappropriate for the State to depart in any fundamental way from the original intent that allowed some schools to opt to remain outside the free scheme and continue to charge fees and therefore I do not propose to withdraw State funding from such schools. This support has been a long-standing feature of our education system and one continued by successive Governments.

Additional information not given on the floor of the House.

However, as I have stated previously to the House, it is important to take stock at this point and in particular I am of the view that while continuing to give reasonable support to existing schools, there should be no further development of the sector and accordingly I do not intend to provide State funding for any new fee-paying schools.

As with all public expenditure measures I will keep the funding arrangements for the schools concerned under review to ensure they remain consistent with their original policy basis.

Arthur Morgan (Louth, Sinn Fein)
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The denomination of such schools is of little interest to me. However, these schools receive taxpayers' money on the double. They are in receipt of the €80 million pot earmarked by the Department for private post-primary schools. Would the Minister consider deducting from that contribution of taxpayers' money to them an amount equivalent to the money they receive under the tax exemption scheme? I accept this is a matter for the Minister for Finance and it should be examined as part of the tax review. However, such schools are receiving money on the double from taxpayers. Would the Minister consider using the money thereby saved by the Department, for example, to reinstate the summer works scheme? The Minister knows as well as I do about the considerable number of schools waiting for significant funds. Stonetown school in my constituency is seeking funding for a roof, Louth village school is seeking a toilet replacement and Termonfeckin school has asbestos on the roof. These schools and many others throughout the country are depending on the summer works scheme to have the works carried out. Will the Minister consider allocating a sum of money equivalent to that which schools are receiving by way of the charitable status tax exemption?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The original definition of "charitable purposes" dates from 1601 and 1634. It was established in law as long ago as 1891 that giving money for the advancement of education is a legitimate pursuit. Schools use the provision for a wide variety of reasons. For example, Sion Hill school in Blackrock had a magnificent 100-year old concert hall in need of refurbishment. It was not funded by the Department of Education and Science but, because of donations, it was able to proceed with the project and reopen last Saturday. Taking donations allowed it to qualify for an additional tax relief, thus affording greater benefits. This is a very topical example of a non-fee-paying school that was able to do very valuable work on a magnificent building and great asset by using the tax reliefs available. Since the relief is available to all schools, it would have been very unfair to deduct the amount from which the school benefited.

Brian Hayes (Dublin South West, Fine Gael)
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The Minister informed the House that 420 primary schools obtained the exemption. Given that there are approximately 3,500 primary schools in the State——

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I referred to primary and post-primary schools.

Brian Hayes (Dublin South West, Fine Gael)
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That 56 schools out of the 420 have obtained the charitable status tax exemption means that at least 10% of them have done so. Is it not the case that schools are obtaining the exemption to make up for the shortfall in capitation funds? That is how wealthier schools in more well-to-do areas of the city are operating. They are seeking donations as a means of trying to make their books balance because the capitation funding they receive from the Department is insufficient.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I understand only 32 of the schools are fee-charging. I do not have the breakdown between primary and post-primary schools but the phenomenon is evident right across the sector.

Brian Hayes (Dublin South West, Fine Gael)
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Does that not amount to 400 primary schools?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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No. Seven hundred second level schools are non-fee paying. They are included in the figures.

Brian Hayes (Dublin South West, Fine Gael)
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How many primary schools are there?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I do not have the breakdown between primary and post-primary schools but there are 420 primary and post-primary schools in total.

I have just given a very practical example of how a non-fee-paying school was able to carry out valuable work by using a relief available to all. Obtaining the relief does not interfere in any way with the running of the schools. Since the relief is available to all, and not just a specific group, I do not see any reason to remove it. However, it is not a matter for me but for the Minister for Finance to determine which schools should qualify.

Arthur Morgan (Louth, Sinn Fein)
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Does the Minister believe we should be trying to move towards circumstances in which there is no need for private schools and in which public schools will deliver adequate education and facilities for all pupils in the State? Would this not be the ideal model? Is the Minister doing anything to move the education sector in this direction?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The quality of education in fee-paying and non-fee paying schools is identical, regardless of their location, and this has been borne out by international studies. I have no intention of breaking a 40-year old tradition of recognising the fee-paying schools but I have said that while I continue to provide reasonable support for existing fee-paying schools, there should not be any further development of the sector.