John Pesutto vows to repeal Daniel Andrews’ private school tax

Almost a week after announcing its tax on private schools, the Andrews government still hasn’t said which ones will be affected.

Premier Daniel Andrews schools that had been eligible for the government’s capital grants program would continue to be exempt from payroll tax.

Victoria’s opposition has vowed to repeal the Andrews government’s tax hike on private schools, as parents remain in the dark about exactly which schools will be affected by the decision to remove their payroll tax exemption, almost a week after the state budget was handed down.

Catholic schools have also called for the tax to be axed, warning it could impact about 20,000 students.

As part of a suite of measures intended to help Victoria repay $31.5bn in debt attributed to the Covid pandemic, the government last week announced about 110 private schools would be stripped of their payroll tax exemption, raising $421m over three years.

Schools still have not been formally notified whether they will be affected but, in a fact sheet issued on Monday, the Department of Treasury and Finance said the list of schools would be “informed by a well-established delineation between ‘high-fee’ and ‘low-fee’ non-government schools for the purposes of allowing access to a range of programs”.

“This takes into account private schools (sic) fees, as well as other contributions, and compulsory levies. This definition of ‘high fee’ was set at $7500 in 2020-21 based on school fees in 2019, and will be indexed,” the sheet states.

“The change will come into effect from 1 July 2024. In that financial year, with indexation, the figure is likely to be above $8000. Payroll tax-liable schools will be determined based on this definition of ‘high fee’ by the Minister for Education, with the consent of the Treasurer.”

Opposition Leader John Pesutto promised to repeal the tax on schools should he win government in 2026.

Leader of the Opposition John Pesutto.

“We don’t believe Victorians who work hard and send their kids to independent schools should be punished for the financial incompetence of the Andrews government. It’s just not fair,” Mr Pesutto said. “What we’re seeing here is the Andrews government opening up a new frontier of taxation, attacking a sector that has never previously been subject to payroll tax.”

National Catholic Education executive director Jacinta Collins, a former Labor senator, said the government needed to end the “tax grab”, which she said could impact about 20,000 Catholic school students and their families.

Ms Collins condemned as a “nonsense” the government’s claim that government schools pay payroll tax and that independent schools until now have been given a “sweetheart deal” via an exemption.

She said universities were being exempted from the tax while schools, who were also impacted by the pandemic, were picking up the tab.

“There is no well-established delineation between high-fee and low-fee schools,” she said.

“The $8000 threshold is at the midpoint of minimum fee expectations, impacting on schools who are only charging moderate fees.

“Most of our Catholic schools set fees moderately above the minimum fee expectation so they can provide fee relief and other support for families in need.

“The Victorian government needs to seriously rethink this impost on non-government schools and their families.”

Asked on Tuesday whether the $8000 fee threshold was “set in stone”, Premier Daniel Andrews said: “Not just yet … we want to communicate with those schools before we communicate with (the media). I think that’s just a fair and reasonable thing to do.”

Mr Andrews said schools that had been eligible for the government’s capital grants program would continue to be exempt from payroll tax, while those that have not qualified for capital grants funding would likely have to pay the new levy. “But again, we’re just working through the details of that, and as soon as we can confirm it, obviously we’ll do that with those affected, and then we can share that.”