Plans to increase taxes on backpacker income in Australia are to be reviewed as fears grow about labour shortages, especially in the agriculture and hospitality sectors.
Foreigners on working holidays currently pay no tax on their first 18,200 Australian dollars in income, and a 19 per cent rate on earnings up to 37,000 dollars.
But the federal budget last year announced the Government’s intention to introduce a new 32.5 per cent tax on all income earned by backpackers on Working Holiday Visas, due to come into effect this July.
The proposal triggered outrage from the agriculture and hospitality sectors, which rely heavily on seasonal foreign workers.
A review of the plan is now underway, led by tourism minister Richard Colbeck.
Mr Colbeck said the review had been triggered by “legitimate concerns” about the impact the changes would have on the country’s global competitiveness and its ability to continue attracting backpackers.
“The backpacker workforce is vital to two of our key super growth sectors - agriculture and tourism,” he said.
“We have therefore decided that the proposed tax arrangements require further discussions to ensure Australia does not lose market share in backpacker visitation.”
The number of Irish people travelling to Australia on Working Holiday Visas has fallen dramatically in recent years, even before the tax changes are introduced.
In the 12 months to June 2015, just 7,894 Irish people were granted a Working Holiday Visa, down from 12,004 the previous year and 25,827 in 2011/12.
Directors of True Blue Migration Joy Hay and Maryanne Gruar said introducing such a tax would have “disastrous consequences” for Australia.
"The number of backpackers coming to Australia has already dwindled in recent years, these changes would be the final nail in the coffin. Why would a backpacker want to pick fruit in 40 degree heat and hand a third of their pay to the taxman when they can travel and work in Europe and pay a normal rate of tax?"
