Lonely Planet Writer

Australia delays plans to implement 'backpacker tax' after concerns about impact on tourism

The Australian government has decided to delay plans to implement a ‘backpacker tax’ on travellers working in the country after opposition politicians, farmers and the tourism industry warned the move would hurt both the agriculture and tourism sectors.

Hikers on Ramsay Bay, with rocky Nina Peak rising just ahead.
The government has decided to delay plans for a backpacker tax. Image by Andrew Bain/Getty Images

The government had planned a levy of 32.5% tax on the wages of young foreigners on working holiday visas in the country starting in July, saying it would bring in AU$540 million in additional government revenue. But the move was met with opposition, particularly from farmers who rely on young travellers to work on their farms, often picking fruits and vegetables. Tourism groups also called the taxes punitive, explaining that working holiday travellers help stimulate the economy and would be discouraged by the tax from coming to Australia, instead heading to countries like Canada or New Zealand.

Surfer on beach at sunset, Noosa Heads in Queensland, Australia.
Surfer on beach at sunset, Noosa Heads in Queensland, Australia. Image by Matt Munro

Both groups have acknowledged that workers’ should be taxed – currently anyone on a working holiday visa can earn just over $18,000 without paying taxes – but the high rate of 32.5% did not allow Australia compete against other popular countries with lower tax rates for working travellers, reports the Australian Broadcasting Corporation. Now, the government has delayed any changes until 1 January 2017, reports the Guardian, and the tax will be reconsidered in the autumn. The Guardian also reports that since the announcement of the plans for the tax, there has been a drop of roughly 6% in applications for the working holiday visa.