The upcoming backpacker tax has set off a scare among the agriculture and tourism sectors. The controversial 32.5 per cent backpacker tax will take effect from July.
The agriculture industry is worried that the tax would lead to severe labour shortage. It said the horticulture industry will be the worst hit. The backpacker tax proposes taxing foreigners on a working holiday visa at 32.5 percent on their earnings upto$80,000. It also scraps the $18,200 tax-free threshold.
The National Farmers Federation (NFF) has called for a compromise formula. It asked the government to go for a moderate tax of 19 percent. Taxing backpackers at 32.5 cents on every dollar will jeopardise Australia’s horticulture industry, reports ABC News.
“Horticulture is worth around $10 billion to the Australian economy, it is growing very fast and by 2030 horticulture will be worth $30 billion,” NFF chief executive Simon Talbot said.
However, Agriculture Minister Barnaby Joyce suggested a wait and watch approach. “If it became quite clear and apparent after the tax came in that there were major changes, then of course we are willing to consult and consider what we will do then,” he said.
Many rural MPs are also opposing the tax. They are doubtful whether it would generate the full $540 million forecast by Treasury for three years.
“It is the harvest-dependent international backpacker scene that we want to see continue and not suddenly disappear,” Liberal Member Sharman Stone said. Stone is the chair of Coalition’s Agriculture Policy Committee.
Jeff McMahon, owning farms at Stanthorpe in Queensland, said the tax will scare off backpackers. He said the tax could pinch the Government more in the long term. “It is like shooting the goose that lays the golden egg,” he said.
NFF’s Talbot added that the tax would deflect foreign labour to Canada and New Zealand. NFF Workforce Productivity Committee chief Charlie Armstrong noted that backpackers are making only an average $15,000 during their stay.
He said the tax hike would be “dwarfed by the serious economic impacts of reduced backpacker tourism and associated agricultural losses.” The Australian immigration department also revealed a progressive decline in workers coming to Australia under the 417 visa. More pertinent was the falling number of working holidaymakers from Ireland, reports The Sydney Morning Herald.