Lonely Planet Writer

Australia's proposed 'backpacker tax' has been reduced in an effort to draw in more travellers

Australia has announced some good news for backpackers – the government has reduced a proposed tax on travellers with working holiday visas, which critics said would make the country a less attractive destination for visitors.

Young traveling couple having rest on the rock and enjoying view in Blue Mountains in Australia.
Young travelling couple resting on a rock and enjoying the view in the Blue Mountains in Australia. Image by narvikk/Getty Images

When the original “backpacker tax” – a 32.5% levy on every dollar earned by travellers – was announced, the Australian government came under fire from travellers, farmers and the tourism industry. Currently, travellers on a working holiday visa can earn up to $18,200 without paying any tax.

Farmers were opposed to the idea as many rely on travellers to do work like picking fruits and vegetables. Many in the tourism industry also had concerns that a punitive backpacker tax would send travellers looking for other destinations for their working holidays, like Canada or New Zealand.

Man and woman admiring the sea at sunset. In the distance are the Twelve Apostles, unique rock formations that rise out of the sea along the Victorian coast.
Man and woman admiring the sea at sunset. In the distance are the Twelve Apostles, unique rock formations that rise out of the sea along the Victorian coast. Image by ©Chris Williams Black Box/Getty Images

To reduce the impact of the proposal, the government has now announced that the tax will be reduced to 19% on any earnings up to $37,000. In an effort to entice more travellers to Australia, the application charge for the visa will be reduced by $50 to $390, and the government will implement processes to improve working conditions.

A government statement says “working holiday makers are an important part of Australia’s $43.4 billion tourism industry and a key source of labour, particularly in the agriculture, horticulture, tourism and hospitality sectors. We also recognise, as do stakeholders, that working holidaymakers should pay fair tax on their earnings”.