tax

Renewed calls for Australian government to scrap backpacker tax

by Ray Clancy on September 15, 2016

in Jobs in Australia

Farmers and growers in Australia have renewed their calls to the Government to abandon its plans to introduce a backpacker tax next year.

Horticulture body AUSVEG says that a new report from the Productivity Commission, the Government’s independent research body, points out that temporary visas can be an effective response to labour shortages.

studentbackpackersAUSVEG believes that the tax which could be introduced as early as January will put off backpackers who are a much needed part of the agricultural labour force when extra workers are needed at harvest time.

The Commission’s report includes a recommendation for the Government to assess the costs of the proposed tax, which would introduce a 32.5% tax rate on working holiday makers on all earnings. Currently backpackers pay no tax on income up to $18,000. As the average backpacker earns $13,300 most do not pay tax at the moment so critics argue the new tax regime will result in a pay cut for workers.

‘During peak seasonal periods, Australian growers rely on temporary overseas workers to make up for domestic labour shortages, and we welcome the Productivity Commission’s findings that these workers are an effective way of filling these shortages,’ said AUSVEG chief executive officer Simon Bolles.

‘Workers who come to Australia under these programmes, including backpackers, ensure that Australian growers can keep feeding our nation. This means that policies which could deter workers from visiting Australia, such as the proposed backpacker tax, threaten the productivity of our industry,’ he pointed out.

‘Backpackers who come to Australia are vital to ensure that Australian growers can keep feeding our nation. This means that policies which could deter workers from visiting Australia, such as the proposed backpacker tax, threaten the productivity of our industry and its ability to satisfy our growing export markets, as well as the health of everyday Australians,’ he added.

The Government is currently reviewing the policy change and there has been an indication that the rate could be lowered. But Tasmanian Senator Andrew Wilkie described it as an ill-considered revenue measure. ‘It will significantly reduce availability of labour for farmers, reduce the number of tourists coming to Australia and encourage tax avoidance,’ he said.

It is expected to hit regions like Tasmania hard as the island has a disproportionate reliance on seasonal workers and the broader state economy is underpinned by tourism and farmers point out that the proposed introduction is set to hit the harvest season which gets underway in January.

Tasmanian Senator Jacqui Lambie said producers are already struggling to prepare for the summer harvest. ‘Without backpackers we’re going to have rotting, disgusting fruit sitting on the ground,’ she added.

Her view is backed up by Tasmanian cherry grower Howard Hansen who said that if a decision does not come within farmers will have to leave fruit on the trees. ‘Normally by this time of year we’re inundated with inquiries, but we’re at least 60% down on the amount of inquiries for the time of year. We don’t have until the end of the year to have a decision, because it takes people time to come to Australia, they are planning their travel now,’ he added.

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