The Federal Government will delay by six months the introduction of its highly unpopular backpacker tax.
Assistant Treasurer Kelly O’Dwyer confirmed yesterday that the Government would review working holiday visas and postpone any changes to the current system until January next year.
Critics, however, point out that the move is just a deferral and the tax is still alive. They fear the government is postponing a decision till after the election. The proposed tax is meanwhile in limbo and could return to damage the tourism and agricultural industries. Labor has not committed to reducing or scrapping the tax, though the Greens say they want it dumped.
Tourism and accommodation bodies throughout Australia have campaigned against the backpacker 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.
“The backpacker tax is a bad policy and we are very pleased to see the Federal Government has been listening to industry and will delay its introduction of the tax until at least 1 January 2017,” Margy Osmond, chief executive of the Tourism & Transport Forum Australia (TTF), commented yesterday.
“Industry will continue to argue that the preferred outcome is for the Federal Government to abandon the backpacker tax in its entirety.
“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. 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.
“Industry looks forward to continuing the dialogue with the Government and the Opposition on improving working holiday visas and encouraging more of them to visit Australia and support our regional economies.”
Written by Peter Needham