Acting Prime Minister Barnaby Joyce has hinted that big changes are underway to the proposed backpacker tax, one of the most foolish and short-sighted taxes ever envisaged by a government.
The highly unpopular tax, due to come in on 1 January 2017, could severely damage the tourism and agricultural industries. Farmers are reportedly not investing in vital seed supplies and equipment for crops like lettuces, because they fear the tax will deter the backpackers who form the seasonal labour force they depend on to harvest the crop.
Tourism and accommodation bodies throughout Australia have campaigned for over a year against the tax, which threatens to massively penalise young holidaymakers – making them likely to ditch Australia in favour of rival destinations such as New Zealand.
The change would see foreigners on working holiday visas taxed 32.5 cents from the first dollar they earn, with a scrapping of the AUD 18,200 tax-free threshold. As backpackers are a vital resource for rural agriculture and tourism, the tax would hit both those industries.
Many backpackers are reported to be heading to other destinations such as Canada or New Zealand, because of the looming tax. They plan to make just short visits to Australia and to work elsewhere.
Australian tourism lobby groups have slammed the proposed backpacker tax as plain “bad policy”. They can hardly believe the government would pursue such a foolish course.
“The concept of taxing working holiday makers at 32.5% on every single dollar they earn is foolhardy when they have the entire world as a destination to travel to and spend their money in,” Margy Osmond, chief executive of the Tourism & Transport Forum Australia (TTF), commented.
“If we embark on this policy they simply will not come to Australia.
“The tourism sector is already expecting a 123,000 workforce shortage by 2020, driving away working holiday makers will only add to the challenge of securing staff especially in rural and remote regions that depend on seasonal workforces.”
Written by Peter Needham