The ongoing saga over the Federal Government’s destructive backpacker tax needs to be resolved in next week’s budget – that’s the message from the Victorian Farmers Federation (VFF).
The VFF is concerned the Government’s proposal to tax all working holiday makers as non-residents at a rate of 32.5 per cent on all income is already starting to impact the agriculture and tourism sectors.
“There has already been a decline in backpacker numbers and the tax hasn’t come into effect yet, so what we’re seeing is a taste of things to come,” VFF Horticulture vice president Emma Germano said.
“Some producers are starting to panic because they don’t know if they should plant for their usual crop…it’s all very uncertain and the Government needs to resolve the issue.”
The VFF and its partner organisations proposed an alternative tax rate of 19 per cent for backpackers from the first dollar earned, which would be achieved through deactivation of the tax-free threshold.
Ms Germano attended a roundtable discussion with tourism minister Senator Richard Colbeck and assistant agriculture minister Senator Anne Ruston last month as part of a cross-departmental review of the tax.
“The Government invited industry to the table to come up with workable ideas that could be alternatives to the 32.5 per cent backpacker tax and we welcomed the opportunity to be part of the process…the 19 per cent proposal is just such an alternative,” Ms Germano said.
“We want to get a beneficial outcome for the agriculture and tourism industries – two sectors that are vital to the Australian economy.
“If the government is serious about connecting with – and growing – our industries, we will see the backpacker tax addressed in next week’s budget.”
More than 40,000 visa holders work in the agriculture industry each year and contribute around $3.5 billion to the Australian economy.
Currently the tax, paid by Working Holiday Maker visa holders, depends on the box they tick on the Taxation Declaration form, which means that in some cases visa holders can end up paying no tax in Australia.
“We have always said that if backpackers want to work in Australia, they need to be taxed like the rest of us, but the Government needs to be reasonable in its approach,” Ms Germano said.
“We can’t expect backpackers to pay a tax rate of 32.5 per cent when an Australian resident next to them could be paying 13 per cent, because it is hard to explain and is a major disincentive to them working in Australia.”
