See how much private schools would have to fork out in payroll tax here

Catholic schools will fight the Victorian government over its controversial payroll tax, saying making middle-income parents prop up the state budget and pay higher fees is unfair.

Catholic school principal Marco Di Cesare says his school would have to find “significant savings”, to minimise any tax change impact on parents. Picture: Valeriu Campan

Catholic schools have gone to battle with the Andrews government over its controversial payroll tax, warning that making middle-income parents prop up the state budget was unfair and would “damage our relationship”.

The Catholic Education Commission of Victoria (CECV) yesterday wrote to all state Labor MPs on behalf of its 21,000 students and 40,000 parents, pleading with them not to proceed with the plan.

The removal of the payroll exemption for 115 private schools — including 20 Catholic schools — is expected to add around $1000 to the annual fees and cost high-end schools up to $7m a year.

It’s understood schools will hear whether they will be hit with the tax on July 1 this year.

The letter signed by CECV executive director Jim Miles says the new $421m tax “will damage our relationship and reverse decades of settled policy”.

“The new tax will rip up to $1 million a year from the operating budgets of schools,” it says.

An internal working list of 20 Catholic schools expected to be hit by the new tax obtained by the Herald Sun includes high-flyers Xavier College, which has fees of more than $30,000 a year, followed by Loreto Toorak and Genazzano ($27,000).

The list also includes nine schools with fees of less than $10,000, including Sacred Heart Girls’ College in Oakleigh, St Joseph’s Ferntree Gully and Our Lady of the Sacred Heart College in Bentleigh

The letter to Labor MPs says most of the schools affected are not wealthy.

“They are local secondary schools, with hard working middle-class families, who now face fee increases and/or cuts in teaching and learning programs and investment in school facilities,” the letter says.

“Based on the Victorian government’s forecasts, this decision equates to a 10 per cent cut in funding to non-government schools from the Victorian government. Some Catholic schools could actually become a funding source for the Victorian government – they could pay more in payroll tax than they receive in state recurrent grants.

“We are asking for you to advocate to your colleagues that the proposal not proceed. At the minimum, the fee threshold at which schools become eligible for payroll tax should be significantly increased,” it says.

The threshold for schools affected will be average fees of $8000 or more next year.

Marco Di Cesare, principal of Marcellin College in Bulleen, which charges annual average fees of around $12,000, said his school “aimed to break even”.

Principal of Marcellin College in Bulleen Marco DiCesare with students James and Panesh. Picture: Valeriu Campan

“We do not sit on a comfortable surplus. We are disappointed to be lumped into high-fees schools which charge $40,000 or more.”

Mr Di Cesare said his school would have to find “significant savings” given that it wanted to minimise the impact on parents.

Rita Grima, principal of St Columba’s College in Essendon, which charges fees of around $10,000, said the school could be up for a bill of around $800,000 next year.

“We have families from a variety of socio-economic backgrounds. Why should our families be asked to help balance the State budget?” she said.

The bill tabled in parliament states that the tax will be levied by the Minister for Education and the Treasurer according to the fees charged, other financial contributions received by the school and “any other matters the Minister considers appropriate”.

The Opposition on Wednesday seized on comments made by Education Minister Natalie Hutchins during Question Time.

When asked about whether independent schools would be slugged three times by also being forced to pay Covid and mental health debt levies, Ms Hutchins said she was unaware of Victorian schools with a payroll above the $10m threshold.

But Opposition education spokesman Matt Bach later said this response was “obviously untrue”.

“According to the most recent data, 69 Victorian independent schools have a payroll above $10m,” he said.

“This will simply mean that they won’t just have to pay the initial schools tax, they will have to pay a triple-whammy of taxation.”

He said the Opposition will repeal the tax if it wins office in 2026.

A state government spokesman said the government has an established process for separating low fee from high fee independent schools.

“The threshold will be indexed, and we’ll have more to say about which schools will no longer receive the exemption before the new financial year,” he said

The government’s aim is to ensure the exemption only remains for schools that genuinely need support.

The CECV national director Jacinta Collins also signalled the tax could have implications for the federal funding of schools.