Principal Marc Light looks at the camera, he is wearing a grey suit and smiling. The King David School's logo is behind him, silver on a wood background.

The proposed Payroll Tax

Over the past weeks you will have heard about the Victorian Government’s proposal to remove the decades long Payroll Tax exemption that has been in place for independent schools.

Needless to say, I am greatly concerned by the financial implications of this proposed change and, even more so, by the absolute lack of consultation or warning which would have allowed for us to meaningfully prepare to mitigate its impact. As it stands, a brief statement in the budget papers with few associated details announces a change that has the potential to render years of careful strategic planning redundant.

This is a sudden and unexpected decision that was not mentioned once in the lead up to the state government election which occurred just six months ago. It is unfortunate that voters were denied the opportunity to consider this significant policy change when they cast their votes.

The major cost centre, and the most important resource in all schools, is staffing. Therefore, a payroll tax will place a significant strain on many schools’ finances. The burden will depend on the size of each school’s workforce and will be especially pronounced in schools like ours that conduct religious, Hebrew and cultural education and programming alongside regular secular studies.

Additionally, there has been no information provided by the Government on whether other new taxes – the COVID-19 Recovery Levy and the Mental Health and Wellbeing Surcharge will also be applicable to schools.

We are fortunate that through prudent financial management by successive school councils and school leadership, our school is in a sound financial position. I shudder to think about the impact on independent schools who have significant debt and are also facing rising interest rates. I am aware that some are facing an existential crisis as a result of this decision.

The impact of the new tax or taxes will be substantial for us and I believe that regardless of one’s views on equity and the merits of government-funded independent school education, there should be an acknowledgment that a sudden implementation of such a significant financial impost is unfair.

Unfortunately, but not entirely unpredictably, the discussion around the topic has led to generalised and unsubstantiated attacks on independent schools. I am also acutely aware that in communicating our opposition to this measure we are subject to accusations of guarding privilege and cynical responses like – “cry me a river”. This was the very response to a heartfelt discussion on radio by a principal from another independent school.

I want to be clear that our opposition to this measure is not about guarding privilege. We are a community school that works tremendously hard to ensure that we provide access to many students who otherwise could not afford school fees. We forgo almost a quarter of fee revenue annually to support these families.

We are also the only Progressive Jewish school in Australia. We offer an inclusive approach to Jewish life that is characterised by egalitarianism, informed choice and an application of Jewish beliefs and practices that align with contemporary society.

For many of our families we are their primary connection to their Jewish identity. As such, we play a vital role in providing a substantive link to culture, religion and identity and the maintenance of Jewish continuity. We want to continue performing this function to the best of our ability in order to best serve our students and their families. Accommodating such a substantial financial hit will make it so much harder to achieve this goal.

We are collaborating closely with Independent Schools Victoria and our colleagues across the other Jewish schools to express our concerns and oppose the introduction of this tax.

We will continue to try to explain to government representatives why we believe that the imposition of this change of policy is so unreasonable and will do our best to advocate for our precious school.

Shabbat Shalom,

Marc Light