Fewer Victorian private schools will lose their longstanding payroll tax exemption than first thought, with the fee threshold to be increased.
The 2023/24 state budget forecast about 110 non-government schools would lose the exemption from mid-2024, raising $422.2 million (US$280 million) for the state across the next four years.
Peak bodies for independent and religious schools have criticised the changes, saying lower-fee schools would be affected.
But Premier Daniel Andrews said that would not be the case, with the threshold to be higher than the current fee mark of $7500 (US$4970) per year.
“I’m not in a position to confirm what it will finish up at, but it will go up,” Andrews told the budget estimates hearing on June 2.
Andrews said the education minister would consult with the sector on the new threshold, although he expected fewer than 110 schools would lose the exemption.
“Therefore, the revenue and the coverage assumptions that the treasury department have made off the current system will have to be revised,” Andrews said.
Schools should know if they’re still exempt from the tax by September this year, Andrews said.
The Catholic Education Commission of Victoria and Independent Schools Victoria welcomed the premier’s comments but say consultation is a priority.
“We welcome his offer of dialogue and we are ready for discussions,” ISV chief executive Michelle Green said.
But opposition education spokesman Matt Bach said the government’s concession did not go far enough.
“We have pledged to scrap it and the government must do the same,” Bach said.
Andrews also used budget estimates to provide assurances to communities caught up in the state’s fast-tracked ending of native logging.
Andrews said the government would provide more than its budgeted $200 million (US$132 million) in assistance if further was required, including more face-to-face counselling services for residents.
Treasury officials also faced budget estimates on June 2, with secretary David Martine saying unemployment would not rise as a result of the $31.5 billion (US$20.9 billion) COVID-19 debt repayment plan.
About five percent of Victorian businesses with a national payroll above $10 million (US$6.6 million) will begin paying an additional payroll tax of 0.5 percent from July.
Asked if the change would cause businesses to cut staff, Martine said the state’s 3.9 percent unemployment rate would not rise.
“One shouldn’t necessarily assume that payroll tax is something that will impact on employees,” Martine said.
Businesses with a national payroll above $100 million (US$66 million) will be slugged with an additional 0.5 percent levy on top of the existing tax rate.
Payroll tax exemptions, such as those for hospitals, charities, local councils, and wages paid for parental and volunteer leave will continue to apply.
Treasurer Tim Pallas said job creation was a core focus of the state’s broader economic recovery plan.
“Since the economic low point of the pandemic, which was September 2020, employment in Victoria has increased by close to 440,000 jobs,” Pallas said.
Pallas handed down his ninth state budget last week.
