By Robyn Grace and Lachlan Abbott
More private schools will be added to the Victorian government’s payroll tax hit list if they make more than $15,000 in income per student, after the state reversed a decision that would have meant some schools would avoid paying the tax despite already crossing the threshold.
The change comes after The Age revealed schools were already breaching the threshold for the payroll tax, but would not have to pay because they were left off the initial list released by the Andrews government of 60 schools to be hit with the tax.
After questions from the sector about the arbitrary and unfair nature of the operation of the policy, Education Minister Natalie Hutchins said on Tuesday while the income threshold of $15,000 per student would remain in place, schools would be assessed annually on their inclusion on the list.
“The threshold has been set at $15,000 and will remain in place until at least January 1, 2029, when it will be reviewed,” Hutchins said.
“Using the annual data provided to the Australian Curriculum, Assessment and Reporting Authority (ACARA), non-government schools will be assessed on an annual basis against the threshold, and if a school’s total income per student exceeds the threshold the school will become subject to payroll tax.
“If a school’s total income per student falls below the threshold, the school will no longer be subject to payroll tax.”
Any new non-government schools opening between now and 2029 were already set to be assessed against the threshold and that remains in place.
The tax was originally planned to contribute $420 million towards covering the state’s COVID debts, but will reap $100 million less after the government lifted the threshold from $7500 to $15,000.
Opposition education spokesman Matt Bach said the government’s tax was an “unmitigated shambles” that must be scrapped immediately.
“Victorian schools, families and students are paying the price for the Andrews government’s incompetence,” Bach said.
Opposition finance spokeswoman Jess Wilson said the tax was “unfair, regressive and its implementation has become nothing more than a farce.”
“The Andrews government has gone back on its word and this latest change will see dozens more schools liable, and thousands of hardworking families hit by higher fees to send their children to the school of their choice,” Wilson said.
“The government has had one position in the morning, and another in the afternoon.”
Catholic Education Commission of Victoria executive director Jim Miles said that only four weeks ago the government had assured them the list of schools subject to payroll tax would not change.
“This at least provided certainty for our schools,” he said. “This continuation of policy on the run by the state government is deeply disappointing and a gross breach of trust. It makes it difficult to take any future statements on this issue at face value.”
Independent Schools Victoria chief executive Michelle Green has said schools were struggling with the tax’s arbitrary nature and the “extraordinary discretion the education minister has, to pick and choose who pays and who doesn’t”.
After further government changes on Tuesday, she said: “This latest change is adding to the confusion, anxiety and uncertainty for independent schools. Schools which thought they had clarity about whether they are on or off the tax list have had that certainty swept away.”
Green said Tuesday’s announcement had now disrupted current school budget planning, without consultation nor consideration of school leaders and parents. She said she would seek an urgent meeting with the education minister.
Miles, representing Victoria’s Catholic schools, said it was “unbelievable” that the government did not plan to index the $15,000 tax threshold as costs continued to rise.
“It is an unfair tax grab that will force even more schools to either increase their fees or make cuts to their teaching and learning programs,” he said on Tuesday. “We cannot accurately predict how many schools might have annual fee income above $15,000 per student between now and 2029.”
Public schools are already liable for payroll tax but non-government schools have historically been exempt due to their not-for-profit status.
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