A proposed 32.5 per cent tax rate on income earned by working holiday visa holders will be reduced to 19 per cent after strong opposition from agricultural and tourism industry bodies.
Fears that working holiday makers and backpackers would desert the country’s regional areas once the tax was imposed began to be realised with backpacker numbers down significantly after the budget announcement.
The announcement was made today by Treasurer Scott Morrison.
Member for Forrest Nola Marino said the amendment to the tax plan would help protect the South West’s future given the region’s reliance on traveller labour.
“Agriculture and tourism makes a fundamental contribution to local economy in the South West,” Mrs Marino said. “The win on backpacker tax is a win for South West farmers who can get their fruit off the tree, off the vine and off to market.”
If 0.5 per cent of people who would have travelled to Australia are put off by the higher airfares, it would result in a loss of 4,400 visitors, $11 million and 80 jobs per year.
- Evan Hall, Tourism Council WA
Further changes will see the visa application fee reduced by $50 and an increase in age eligibility to 35 years.
The Federal Government also revealed plans to increase airport departure tax fees by $5 per passenger leaving Australia to offset the drop in revenue, a move branded "detrimental” by Tourism Council WA chief executive Evan Hall.
The new plan will see the Passenger Movement Charge (PMC) increased by $5 for every international visitor, a cost included in return airline tickets to Australia.
“Any increase on the charges for travellers will result in fewer leisure visitors coming to Australia,” Mr Hall said, adding that the move would make Australia’s PMC one of the highest in the world.
“Every lost international visitor results in a loss of $2,560 in visitor expenditure.
“If 0.5 per cent of people who would have travelled to Australia are put off by the higher airfares, it would result in a loss of 4,400 visitors, $11 million and 80 jobs per year.”
Busselton Chamber of Commerce chief executive Ray McMillan told the Mail that he believed the tax reduction would be well received by regional business owners.
“The agricultural and tourism and hospitality sectors rely heavily on a steady pool of seasonal labour,” Mr McMillan said.
Mr McMillan said the reduction would also allow Australia to remain competitive with New Zealand in attracting working holidaymakers.
“It is expected that employers will welcome the change and the new tax rates place Australia on a similar basis as New Zealand.
“Both countries are backpacker destinations and it would have been very inequitable if the previously proposed rates had been introduced.”
Mr Hall said that while the tax reduction was positive and echoed Mr McMillan’s views, he did not believe the shortfall of revenue from the decision should be made up by taxing international visitors.
“Tourism is an export in a highly competitive international market, and every time you tax an export you lose to other markets,” Mr Hall said..
“All this outcome achieves is switching a tax from one type of visitors, backpackers, to another type of visitor in international leisure tourists.
“Both of these types of visitor travels to regional areas, and taxing them with result in a reduced number of visitors, reduced expenditure and a loss of jobs.
“While a 19 per cent tax rate is better than 32.5 per cent, it will still have a detrimental impact on the tourism industry.”
