The Victorian government has backtracked on its planned payroll tax for private schools.

The state has reversed its decision to impose payroll tax on 110 private schools after facing criticism from the education sector. 

It comes after Premier Daniel Andrews admitted that the policy would not generate as much revenue as initially projected in the recent state budget. 

The controversial move, which would have removed a payroll tax exemption on high-fee private schools starting July 1 next year, was expected to raise $422 million over three years.

Concerns were raised by schools with annual fees around $7,500, prompting the Premier to reconsider the threshold for the exemption. 

He acknowledged that the current threshold did not accurately reflect current fees and pressures in 2023 and conceded that the policy should have been better explained in the budget papers.

Jim Miles, the executive director of the Catholic Education Commission of Victoria, welcomed the reversal as a “first step”.

The minister for education and the treasurer will determine the updated fee threshold and the list of schools liable for payroll tax by the end of the financial year.

Separately, Emma Rowe, a senior lecturer at Deakin University, has published an opinion piece criticising private schools for their perceived privileges.
Rowe is part of a group of education academics and lobbyists who argue against private schools, claiming they undermine egalitarianism and social mobility.