Australia strikes deal on ‘backpacker tax’

AFP

Foreigners in Australia on working holidays face paying a 15 percent levy on every dollar they earn after the government on Monday compromised on a controversial “backpacker tax”, dumping plans for a higher rate.
Canberra had initially sought a revenue-raising 32.5 percent tax for seasonal workers from January 1 under a proposal first flagged in the 2015 budget, but the move was met with
an outcry from farmers and tour-
ism operators.
They feared it would deter tourists from choosing the country as a destination, with some 600,000 backpackers heading to Australia every year, many finding work picking fruit.
Currently, like other workers, backpackers do not start paying tax until their annual income exceeds Aus$18,200.
Farmers complained bitterly that the levy could affect labour supply at harvest time and the government in September watered down its plans to 19 percent. That led to a political stalemate with the Labor opposition, the Greens and independent crossbench senators demanding 10.5 percent, in line with New Zealand.
But Treasurer Scott Morrison said a compromise had now been reached with key crossbenchers who hold the balance of power in the upper house Senate with legislation set to be introduced on Monday.
“Today the government will be working to put in place a bill which will propose 15 percent on the backpackers’ arrangement,” he told reporters, voicing confidence the government now had the numbers to steer it through parliament this week.
Farmers were grateful the issue looked set to be resolved.
“It has been a painful process but we wholeheartedly welcome the announcement that a compromise rate of 15 percent has been reached,” said National Farmers Federation chief executive Tony Mahar.