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Government backs down on backpacker tax

By   /  September 28, 2016  /  No Comments

The Federal Government has watered down its controversial proposal to tax working holiday makers 32.5 per cent on every dollar earned, reducing it to 19 per cent.

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Government gives ground on backpacker tax after outcry from industry groups

no-returnThe Australian Regional Tourism Network (ARTN) described the move as a step in the right direction for regional tourism.

“As regional and remote businesses are challenged in attracting a seasonal casual labour force, the backpacker market provides an answer that many regional tourism operators and farmers look to,” said David Sheldon, chair of the ARTN.

“On average a backpacker earns between $9k and $13k which is spent within region, their value, both economic and social should never be under estimated.

“In reviewing today’s release of the backpacker tax package it does contain some additional positives for the industry with the extension of the age limit for working holiday makers from 30 to 35, an ARTN initiative, and the reduction of the cost of working holiday visa by $50 to $390.”

In an incentive for backpackers, they will now be able to work for the same employer for 12 months as long as the second six months is worked in different locations.

However, the Government raised the tax on superannuation payments for overseas workers to 95c in the dollar when they leave the country. The Passenger Movement Charge (PMC) will also go up $5 to $60 to be paid by all individuals leaving Australia, whether or not they intend to return.

“While many will be upset about the increase in the passenger movement charge, I believe the tourism industry should be proud that through much lobbying we have not seen an increase in the PMC since 2012,” he added.

Tourism Australia will also receive a further a $10 million to support a global youth targeted advertising campaign.

The Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA) also welcomed the decision.

“AHA and TAA made a strong submission to the Federal Government arguing that the tax hike would provide a major disincentive to working holiday makers at a time when the industry was already experiencing shortages, particularly in regional and remote areas,” said TAA chair Martin Ferguson.

“We would have preferred a complete removal of the tax increase, but this is offset by the reduction in visa charges and also the increase in the age limit for working holiday visitors.

“We also welcome the commitment to the $10 million promotional fund, but the Government’s decision to increase the Passenger Movement Charge by $5 is disappointing as tourism is Australia’s growth industry, and needs incentives to grow, not disincentives.”

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