The tourism industry is concerned that the controversial tax will discourage working holidaymakers to visit Australia when implemented.
The Australian tourism trade is worried that backpackers will shun Down Under as a travel destination and place the country at a distinct disadvantage to competing working holiday destinations like New Zealand if a proposed backpacker tax kicks in.
This new income tax on working holidaymakers – which taxes backpackers about A$0.33 (US$0.24) for every dollar earned – was due to start in July this year and boost government coffers by an estimated A$540 million.
However, following widespread criticism and opposition by farmers and the tourism industry, the controversial tax has been suspended for six months until January 2017, pending a ministerial review.
Presently, like other workers, working holidaymakers do not have to submit taxes unless their annual income is over A$18,200.
The National Farmers’ Federation welcomed the delay of the tax and called for a permanent solution.
Said the federation’s president, Brent Finlay: “Backpackers are an integral part of the Australian agricultural workforce. We must make sure they have every reason to come here to work, and to spend valuable tourism dollars in our regional communities.”
According to Tourism Australia’s managing director John O’Sullivan, the country sees about 185,000 backpackers of the 7.4 million total international visitor arrivals every year.
When asked about the significance of backpacker tourism to Australia, O’Sullivan said: “This (backpacker) group is quite a small group but they stay for a long time in the country and are valuable in (terms of) expenditure. Also, they are very important to the workforce as they work in various tourism industries like hospitality.”
He added: “The government is aware of industry concerns and is working on it.”
Meanwhile, Australian Tourism Export Council’s managing director, Peter Shelley, said in a statement: “We welcome the postponement of this tax and the willingness of the government to look at ways to improve Australia’s backpacker offering, but remain concerned by the continuing uncertainty created by the delay.
“With a review scheduled for early 2017, it leaves backpackers considering an Australian (working) holiday unsure of what to expect and this will only further encourage them to consider an alternative such as New Zealand or an Asian destination.”
Shelley also urged the government to go beyond addressing labour needs in its review of the tax.
“It must also look at the tourism industry and the negative message we are sending to the international visitor market,” he added.
This article was first published in TTG Asia, July 8, 2016 issue, on page 30. To read more, please view our digital edition or click here to subscribe
