Will The Backpacker Tax Be Scrapped?

Plans To Scrap The Backpacker Tax In Australia

Hopes were raised recently that the Backpacker Tax in Australia, which has been much maligned by the farming community and tour operators amongst others, might be scrapped entirely. It was delayed for six months, despite having been scheduled to start on the 1st July this year, due to the widely negative reaction by the Australian people. Michelle Landry, the MP for Capricornia has brought it back to national attention, as she tabled it for the Nationals meeting in Canberra, ACT.

Some of the most frequent criticisms have come from the agricultural sector, which are united in the belief that the tax needs to be addressed as quickly as possible. The National Farmers Federation has revealed that about a quarter of the farm workforce across Australia is backpackers, and 85% of the farm work in the Northern Territory is done by them.

Not only the agricultural industry will be negatively affected though, as the 32.5% tax would reduce the amount of money that backpackers have to spend during their free time, and might deter some backpackers from coming to Australia.

It would mean that the Australian tourism sector would be bringing in less money. Labour has said from the start that it will not be possible to raise the suggested $540 million through this course of action as the number of holiday makers entering the country will likely decrease.

Teri Butler criticised the proposal quite strongly during the ABiC last year, as she admitted that she believed backpackers were an ‘economic powerhouse’ and said that the Australian Government’s choice to cancel working holiday makers’ tax free threshold was ‘counterproductive’.

With the fact that Landry has taken the proposed tax to the table, and she is being backed in varying degrees of support from all parties, it’s likely to be just a short time before the Backpacker Tax is permanently shelved.

Contact a tax agent in Australia