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Government defers introduction of backpacker tax
As a result of growing industry and political opposition, the Federal Government has announced that it will delay the introduction of its ‘backpacker tax’ until January next year.
Ste to be introduced from 1st July, working holidaymakers were facing a 32.5% rate on their earnings, sparking fears by farmers and tourism operators that ‘working backpackers’ would shun Australia as a travel destination.
With nearly 48,000 people having signed an online petition calling on the Government to dump the plan and with the tax an increading election irritant in rural and regional seats, Federal Assistant Treasurer Kelly O'Dwyer today announced that the introduction of the tax would be suspended for six months pending a ministerial review led by Deputy Prime Minister Barnaby Joyce.
Those on working holiday visas make up about a quarter of the country's agricultural workforce, with the figure as high as 85% in the Northern Territory.
The move has been welcomed to tourism and farming industry bodies.
The Australian Chamber of Commerce and Industry also hoped the backpacker tax would eventually be abolished, saying working holiday visitors did jobs that otherwise wouldn't get done.
Tourism & Transport Forum Australia (TTF) Chief Executive Margy Osmond stated “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.”
NT Farmers Chief Executive Shenal Basnayake says losing those workers could force farms to shut down.
Tourism Accommodation Australia (TAA) also welcomed the Federal Government's announcement today that there would be a six-month postponement of the introduction of the tax.
TAA made a number of submissions to the Federal Government arguing that the tax hike would provide a major disincentive to working holiday makers, and particularly backpackers, at a time when the industry was already experiencing shortages, particularly in regional and remote areas.
TAA Chair Martin Ferguson stated “this is a very sensible first step by the Government and one that is applauded by the tourism and hospitality sector across the country.
"Working holiday makers are an important source of labour for the accommodation industry, filling chronic labour shortages in regional areas during seasonal periods.
"Australia competes globally for backpacker tourism and this change would have acted as a serious disincentive to working and travelling in Australia at a time when the Government's own commissioned survey identified the need for 123,000 additional workers in the hospitality and tourism industry by 2020.”
However, there are fears that the review will only extend uncertainty over the tax.
National Farmers' Federation Chief Executive Tony Mahar told the ABC that the delay created further uncertainty for farmers who need to lock in workers to pick crops later in the year.
Mahar stated “putting it off for another six months doesn't help anyone.
"If it is bad policy it shouldn't be there."
13th May 2016 - GOVERNMENT MUST CLARIFY FUTURE OF BACKPACKER TAX
7th May 2016 - TOURISM INDUSTRY DISAPPOINTED BY BACKPACKER TAX RETENTION
4th May 2016 - LEISURE WINNERS AND LOSERS IN THE FEDERAL BUDGET
16th March 2016 - AUSTRALIAN GOVERNMENT TO REVIEW CONTROVERSIAL BACKPACKER TAX
21st February 2016 - ‘BACKPACKER TAX’ CHANGES SOUGHT AS WORKING TOURISTS THREATEN TO LEAVE AUSTRALIA
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