Calls for new backpacker tax in Australia to be scrapped

by Ray Clancy on February 16, 2016

in Australia Travel, Jobs in Australia

Tourism chiefs and farmers in Australia have called for a planned new backpacker tax to be scrapped as it will put off a lot of young people from travelling to the country.

Rather than hitting working holiday makers with additional taxes, Australia should recognise their economic potential and the benefits they bring to existing workers, said Steve Whan, manager of the National Tourism Council.

It is proposed that a new ‘backpacker tax’ from July will scrap the tax free threshold for people working in Australia on working holiday visas and the Government has justified the move by saying that it will bring in an extra $540 million in revenue.

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But Whan pointed out that it is likely to result in a reduction in the number of young people travelling to Australia who are put off by having to pay tax and therefore it will not raise nearly as much as projected.

“The government says this will raise $540 million however, if the number of working holiday makers drop off as a consequence or the amount they work goes down, this figure is already questionable. The tax will undoubtedly cost the nation much more in economic damage,” said Whan.

“The tax will mean fewer workers in rural and regional areas, particularly in agriculture and hospitality. Visitors on working holiday visas meet a growing demand for labour. Without them we face serious staff shortages,” he pointed out.

“The evidence is clear: working holidaymakers do not displace Australian workers, but instead create more economic activity and more jobs,” he added.

The National Farmers Federation also wants the tax to be reconsidered as backpackers are very important to the economy. “They fill critical labour needs at peak times, and bring new life into rural communities. If they have to pay 32.5 cents tax in every dollar, they won’t come anymore. They won’t experience life in rural Australia, and farmers won’t be able to grow and harvest their crops or fill vital on-farm roles,” said a NFF spokesman.

“It’s not a fair tax, and it’s not a sound economic decision. Backpackers contribute more than $3.5 billion to the economy each year. We need more of them, not less,” he added.

Whan pointed out that backpackers have usually saved for some time for a trip of a lifetime to Australia and rather than taking advantage of them and making them pay tax they should be welcomed as an economic asset.

“A backpacker travelling and working in Australia creates economic activity, they spend most of what they earn in the local economy, usually topped up with funds they have saved in their home country. We should not disadvantage them. Rather we should welcome these people to our shores, our farms and our restaurants, cafes and bars,” he said.

 

“The tax change comes despite a working holiday visa costing more in Australia than in some competitor markets, reducing the number of applicants. We need to boost these numbers. Slapping an unnecessary tax on their earnings is not the way to do it,” he added.

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