Australia yesterday watered down plans for a “backpacker tax” on foreigners on working holidays after an outcry from farmers and tourism operators.
Canberra had been under increasing pressure to shelve the tax — A$0.325 for every dollar earned — amid fears it would deter tourists from choosing the country as a destination.
About 600,000 backpackers travel to Australia every year, many of them finding work picking fruit, and farmers had complained bitterly that the tax could affect labor supply at harvest time.
“We recognize absolutely the important part that backpackers play in the overall tourism industry,” Australian Treasurer Scott Morrison told reporters in Canberra. “It is an important sector for the tourism industry, also a very important source of labor in the agricultural sector, particularly for seasonal labor.”
Morrison said the visa application for working holidaymakers would be cut by A$50 (US$38.4) to A$390.
According to the new proposed tax set to be in place from Jan. 1 next year, backpackers would be levied 19 percent on earnings from the first dollar made.
Like other workers, backpackers do not start paying tax until their annual income exceeds A$18,200.
Morrison said the loss in projected government revenue of an estimated A$540 million over the next three years would be made up via a A$5 rise in the departure tax for people leaving Australia.
Backpackers will also face a 95 percent tax on their superannuation — pension — accounts when they leave Australia.
The tourism sector is to be given A$10 million to market the nation to backpackers, who are often young and work in agriculture and hospitality.
“Farmers across the nation are today breathing a sigh of relief following the announcement,” the National Farmers’ Federation said in a statement.
“We have consistently said agriculture simply cannot do without backpackers,” federation president Brent Finlay said.
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