Lonely Planet Writer

Bid to scrap backpacker tax in Australia

Australian farmers and tourism executives want a proposed new backpacker tax scrapped because of fears that it will severely hit the number of young people arriving in the country.

Australian tourist chiefs and farmers want the government to change its decision to impose a tax on backpackers working  in the country
Australian tourist chiefs and farmers want the government to change its decision to impose a tax on backpackers such as those seeking to get to Newcastle in New South Wales  Image by Marko Mikkonen / CC BY 2.0

This sector of the tourism market should be recognised for their economic potential and benefits it gives to Australian workers rather than hitting it with punitive taxes, said the manager of the National Tourism Council (NTC), Steve Whan.

With a tax of 32.5% on every dollar earned from this July, Tourist and farmers chiefs in Australia fear that there will be a huge drop of in numbers of backpackers arriving in the country
With a tax of 32.5% on every dollar earned from this July, tourist and farmers chiefs in Australia fear that there will be a huge drop of in numbers of backpackers arriving in the country Image by Michael Coghlan / CC BY 2.0

The new tax on backpackers is due to come into force in July this year and would spell the end of the tax free threshold enjoyed up to now by those young foreign workers on holiday visas in Australia.

Australiaforum.com reports that the government has justified the step by claiming it will raise AU$540 million in extra revenue on an annual basis.

Mr Whan, however, believes that the introduction of the backpacker tax will result in a marked reduction of young people from abroad travelling to the country. If that proves to be the case, he estimated that there would be a lot less money raised than is being bandied about in official circles.

He predicted that the tax would end up costing Australia “much more in economic damage.”

The NTC chief also pointed out that the new tax would seriously affect the number of workers available in regional and rural areas where traditionally they have satisfied a big demand for labour.

“Without them, we face serious staff shortages,” he claimed.

Mr Whan stressed that these workers did not gain employment at the expense of local workers but in fact helped to create a higher level of economic activity which had a spin-off in more local jobs.

His stance on the tax was backed by the National Farmers Federation which called on the government to reconsider its decision.

The Federation emphasised that if the backpackers are forced to pay 32.5% in every dollar earned, they will go elsewhere and end up not experiencing rural Australian life at all.

A spokesman further said farmers wouldn’t be able to grow or harvest their crops without the necessary level of backpackers’ input, which runs at AU$3.5 million on an annual basis.