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Dracula tax refuses to die as industry sharpens stake

October 13, 2016 Headline News No Comments Email Email

egtmedia59Like Dracula, Australia’s proposed backpacker tax is hard to kill. When threatened, it morphs into other sinister lurking taxes, such as an increase in the departure tax.

The travel industry is fighting to drive a stake into the backpacker tax and halt the spread of other travel taxes, which seem to be springing up like the undead in a horror movie.

The Tourism & Transport Forum Australia (TTF) has seized on the latest ABS overseas arrivals figures to call on the Federal Government to scrap its plan to slap a AUD 60 holiday tax on Australians and overseas visitors travelling out of the country.



The Federal Government announced last month as part of its backpacker tax package that it is planning to increase its holiday tax or departure tax – grandiosely titled the Passenger Movement Charge – to AUD 60 from 1 July 2017. For a family of four people (all aged over 15 years) that represents a AUD 240 tax grab for booking a plane ticket or a cruise fare to travel overseas.  The holiday tax is expected to raise nearly AUD 1 billion from travellers this financial year.

In a new development, the Federal Opposition has come out against the tourist tax regime. Labor’s stance is backed by AFTA and the TTF. See: Opposition weighs in on backpacker tax ‘shambles’

The latest ABS Overseas Arrivals figures released yesterday confirm that 7.99 million people travelled to Australia over the 12 months to August 2016 – up 10.9% on the previous year. Note the big increase in arrivals from China, poised to overtake New Zealand as the primary source of visitation to Australia. Growth from the US, Japan and South Korea is impressive too.

Top 10 Nations for Overseas Arrivals in 12 Months to August 2016

Country of Origin Arrivals (12mths to August 16) Increase/Decrease
1. New Zealand 1,326,900 2.7%
2. China 1,168,700 22.5%
3. UK 709,800 5.3%
4. USA 683,100 17.4%
5. Singapore 432,100 13.5%
6. Japan 391,100 20.2%
7. Malaysia 368,200 11.7%
8. South Korea 270,100 25.1%
9. India 245,800 9.0%
10. Hong Kong 241,500 14.7%

Source: ABS Overseas Arrivals


“This is another strong performance for our international visitor market but its long term potential is being put at risk by a blatant policy of hiking taxes on Australia’s super-growth industry,” said TTF chief executive, Margy Osmond.

The government’s backpacker tax has been threatening one of the most lucrative sectors of the tourism market. Backpackers are essential to tourism and as a workforce for Australia’s agricultural industry.

According to the Department of Immigration and Border Protection’s latest Working Holiday Maker Visa Program Report, the number of granted visas dropped by 5.4% in the 12 months to 30 June 2016. That is 12,229 fewer visas granted to working holiday makers over the period.

Since 2012-13 the number of working holiday makers has dropped 17% from 258,248 to 214, 583 in 2015-16 – a loss of 43, 665.

The backpacker tax has spooked working holiday makers but the government has refused to kill the controversial tax, pledging only to reduce it – while boosting the departure tax.

“The Government’s holiday tax is already raising AUD 1 billion a year on travellers, there is absolutely no justification for it to be increased to AUD 60,” Osmond said.

“The Prime Minister and Treasurer talk about being a lower taxing Government but the tourism sector is squarely in the Government’s crosshairs for tax hikes and fee increases.

“The Federal Government would like to brush off its tax hike on the tourism sector as ‘just a cup of coffee’ but the reality is that the holiday tax on a family of four is now a AUD 240 cash grab from the family holiday budget that could pay for an extra day’s accommodation, a theme park excursion or a couple of days car hire.

“Prime Minister Turnbull has said during the election campaign ‘If you want less of something, tax it more’, and that is exactly what the Government’s current policy of viewing tourism as a ‘cash cow’ is going to deliver.

“If the Government is serious about supporting a strong future economy then it should be embracing policies that back our strengths which includes our growing visitor economy, not ratchet up taxes that undermine the ability of the sector to support more jobs and economic growth.

“The Government can demonstrate its support for the tourism sector by immediately scrapping the AUD 60 holiday tax it wants to introduce from 1 July and work with the industry to attract more international visitors to Australia.”

Written by Peter Needham

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