Australia defers backpacker tax rise after farmers rebel

Australia will review a planned tax rise for foreign travelers who work in the country, following complaints from farmers. A decision on the so-called backpacker tax will be deferred until after the July 2 general election. Under the proposal, foreign travelers on working holiday visas would have paid tax of 32.5 percent on every dollar earned from July 1, when previously they paid no tax on income up to A$18,000 ($13,100), the same as locals. Farmers believed the tax would hit the number of casual workers in the fruit-picking industry.

[The review] is looking at much broader issues around labor force, particularly in rural and regional communities and how it affects our farmers but also our tourism sector as well.

Assistant Treasurer Kelly O'Dwyer

Australia has encouraged backpackers to work on farms with special visas allowing them to stay for a second year if they do three months work in rural Australia. But overseas workers had been targeted as an area to raise revenue as Australia looks to rein in ballooning budget deficits. Australia’s A$34.8 billion international tourism industry was also threatened by the higher tax, with young travelers potentially deciding not to stay as long. In total, backpackers spend A$4.3 billion a year, worth about 12 percent of all international tourist spending.

We must make sure they have every reason to come here to work and to spend valuable tourism dollars in our regional communities.

National Farmers’ Federation president Brent Finlay

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