The Government backflips on its plans to tax backpacker workers

The Government backflips on its plans for a 32.5 per cent tax on backpacker workers.

backpackers working on a strawberry farm

After industry backlash and pressure from backbenchers, the Government has backflipped on its plan to tax backpacker workers, instead presenting what it says is a new, fair deal.

The plan to impose a 32.5 per cent backpacker work tax, first announced in the 2015 Budget, was not welcomed by Australian farmers, for whom backpackers represent a quarter of their workforce. In the Northern Territory alone, backpackers make up 85 per cent of farm labourers. Many farmers declared the tax would create a disaster come harvest time.

It also split the Government and faced harsh criticism from the tourism industry, as well as many backbench MPs.

The new deal will see backpackers taxed at a rate of 19 per cent.

Within weeks of the Government's last backtrack on superannuation, there is speculation that the real mover and shaker behind the dumped proposal is Senator George Christensen, with Bill Shorten wondering just who is running the country.

“We've just seen this latest backflip from the Government on this backpacker tax, there's no doubt that George Christensen and the right wing of that party are spelling out the song that Mr Turnbull has to sing,” said Mr Shorten.

The backpacker tax was expected to raise around $500 million. To offset the losses, the Government is changing the Passenger Movement Charge (PMC), increasing the passenger departure tax, which is usually bundled into the cost of transport, from $55 to $60.

Unsurprisingly, this has the Tourism and Transport Forum up in arms, with Tourism and Transport Forum Chief Executive Margy Osmond saying the Government is treating the tourism industry as a "cash cow".

"This is a long way from fixing the problem, effectively it’s a blatant grab for cash by the Government," she said.

Mr Morrison is happy that the new deal upholds the integrity of the budget, and the fact that it addresses industry and backbench concerns. Legislation is still required in order to enact the new deal.

Read more at www.abc.net.au

What do you think of the new deal? Are you happy to cover the cost of backpacker workers, so they, in turn can support our farmers with lower priced labour? Or would you prefer to see Aussie jobs go to Aussies?

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    COMMENTS

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    MICK
    28th Sep 2016
    11:07am
    "No new taxes". Those words ring almost as loudly as "the Liberal Party does not knife its leaders".
    The public would be behind this if, as usual, the tax burden was not shifted onto the middle class again whilst the top and bottom are all but exempt. No wonder Americans are flocking to looney Trump. Same deal.
    Anonymous
    28th Sep 2016
    11:30am
    So....

    The tax burden WAS going to be applied to low paid workers - but that was taken off in the changes.

    * No effect on the middle class there.

    The low paid workers now don't get their super guarantee - it goes to the government.

    * No effect on the middle class there.

    The $5 additional exit tax for ALL travelers

    * The same effect on all classes there.

    So - the middle class were only affected by these changes to the tune of $5 if they fly out of Australia - the same as EVERYONE ELSE.

    A very sound piece of analytical work there MICK - but only if you were analysing a completely different topic.
    MICK
    28th Sep 2016
    1:05pm
    The perspective of my post was that the government was going to tax backpackers more and now they are adding another $5 charge onto travellers. Simply a transfer of the tax.
    Do some research. And guess who can afford to travel??????
    Retired Knowall
    28th Sep 2016
    3:49pm
    The Farmers need backpackers because they can't get local labour, yet our young in the same area's are on the Dole....go figure.
    Old Geezer
    30th Sep 2016
    5:02pm
    If you can afford to travel then you can afford this extra tax.
    ex PS
    2nd Oct 2016
    7:13pm
    Isn't it funny, the bloke who is trying to introduce this tax is the same one who railed against it in 2008 as being an unfair burden on the tourist industry. (Ref: Insiders 02/10/2016)
    jackie
    28th Sep 2016
    12:22pm
    What's wrong with giving the work to Aussies instead of charging them to cover corrupt farmers? Those farmers must be friends of our politicians.
    KSS
    28th Sep 2016
    12:45pm
    Jackie, stop blaming the farmers and start pointing your finger at young Australians who refuse to do the work. The Hunter Valley in NSW employs backpackers because they simply cannot get locals to do the work. And the Hunter Valley has one of the highest youth unemployment figures in the Country.
    MICK
    28th Sep 2016
    1:07pm
    Not too far off the mark jackie and is reminiscent of the 457 visa scam.
    There is a high unemployment rate in areas where backpackers are employed and a proper government should force our bludgers to do work which is available rather than allow them to sit on the dole for a lifetime.
    Anonymous
    28th Sep 2016
    3:23pm
    The simple fact is that Australians won't or can't be bothered to do the seasonal work. I don't know whether the work is too hard or too lowly paid but if there are dole recipients in the picking areas it's only fair to stop their payments during harvest if they refuse to work without a legitimate reason.
    Rae
    28th Sep 2016
    4:45pm
    Perhaps paying a premium to the employment agency for every welfare recipient they get to work during the season. Barnaby Joyce had a good idea too that $5000 could be earned before it affected unemployment benefits.

    I don't understand why our year 12 leavers are not targeted for these jobs. It would be a boost to their wallets ready for Uni surely.

    My husband cut cane and I picked during a stint when we were young and surfing our way up and down the East Coast.

    It didn't do us any harm and we had a heap of fun.
    KSS
    28th Sep 2016
    12:43pm
    These jobs WOULD go to Australians now if only the Australians would get off their bums and surfboards and go get them.

    The difference between the backpackers from overseas and the same age Australians is that the backpackers are more than willing to do the work that is available wherever that may be whilst the Australians have it too good on welfare and are not prepared to go to the next suburb for a job, never mind halfway round the world.
    MICK
    28th Sep 2016
    11:07pm
    If they had no alternative they would have to...but both sides of politics are frightened of the electoral backlash.
    Of course the low low rates would be interesting to see. I have no idea of how a backpacker is paid.
    Gra
    28th Sep 2016
    12:51pm
    Just wondering, do our backpackers pay tax if they do any work while overseas? I have never been in that situation so do not know. If they do, isn't it only right that foreign backpackers pay tax here?
    Not only do backpackers make up the vast majority of farm labourers in the N.T, there is hardly a pub or roadhouse you can go into up there without encountering a backpacker at the cash register.
    Retired Knowall
    28th Sep 2016
    3:58pm
    the income tax rates in New Zealand are as follows. Note that to give you a more accurate estimate, the tax rates displayed below are including the mandatory ACC Levy (currently 1.45%)
    Yearly taxable Income: Up to NZ$14,000 / Taxable Income 11.95%.
    Yearly taxable Income: from NZ$14,001 to NZ$48,000 / Taxable Income 18.95%.
    I believe Canada charges 10%
    Retired Knowall
    28th Sep 2016
    3:58pm
    the income tax rates in New Zealand are as follows. Note that to give you a more accurate estimate, the tax rates displayed below are including the mandatory ACC Levy (currently 1.45%)
    Yearly taxable Income: Up to NZ$14,000 / Taxable Income 11.95%.
    Yearly taxable Income: from NZ$14,001 to NZ$48,000 / Taxable Income 18.95%.
    I believe Canada charges 10%
    Rae
    28th Sep 2016
    4:59pm
    Same around here Gra. Our businesses are waiting for the influx. It is a very popular summer tourist area and most of the extra jobs are filled by backpackers.

    Unfortunately by the time the Year 12 have finished exams and partying it is too late for them. Then they whinge they can't get work.

    A few clever ones lock in the job from now through the year 12 exams and all Summer but they are the exception.

    The quite achievers that you just know will do really well.

    Any boss seeing that on a CV just knows the work ethics exists.
    KSS
    28th Sep 2016
    8:02pm
    Gra in the UK they have to pay tax at the same rates as everyone else. None up to 11000 pounds (approx $18500) then 20% up to 43000 pounds (just under $73000). But you pay tax from day one and have to claim it back through a tax return at the end of the financial year which in the UK is April 5.

    Working holiday makers in Japan pay 20% non-resident tax rate plus 8% gst equivalent.

    Paying tax as a backpacker is quite the norm in fact and most countries allow you to claim it (or some of it) back when you leave especially of you leave mid financial year and will have paid too much. Australia does the same.

    And Rae, never mind the year 12s who are in effect still at school, what about all the unemployed youth on Centerlink payments at exam time? They have no excuse not to get jobs in the orchards and farms that the backpackers are only too willing to take.
    Rae
    29th Sep 2016
    9:17am
    You are correct KSS. The unemployed youth are a problem.

    Not sure how you motivate someone with no resilience or perseverance. Most are still at home with mum /dad and really need to be persuaded into doing something.

    Perhaps the Singapore solution. If you can't get a job within a certain time the Government gives you one and pays Newstart.

    There is a lot of lantana to clear and trees to plant in my opinion.
    musicveg
    28th Sep 2016
    1:26pm
    I think that farmers prefer to pay low income to backpackers so they can make more money, it is about greed not paying the minimum wage to the unemployed youth of Australia. Am I right or wrong? Backpackers only work so they can party more and travel more, those with a good amount of savings before they come here will not work. Also these are all temporary jobs so there is no security in full long time employment for our unemployed.
    Retired Knowall
    28th Sep 2016
    4:00pm
    Musicveg, you really have no idea. I don't think I've read a more ignorant post.
    musicveg
    28th Sep 2016
    4:26pm
    Sorry for my ignorance I did say am I right or am I wrong, so I must be wrong, please enlighten me?
    Rae
    28th Sep 2016
    5:12pm
    I think you are wrong. Doesn't matter if the money is low does it if you're footloose, young and fancy free.

    We did it working and surfing and saving for Uni during the Summer of 69. Fun or what.

    A lot of time you slept in your car or in a shed. Didn't matter much.

    What mattered was the fun, the money and the precious details on the CV that said you were a worker worth a day's pay.

    A lot of the unemployed just don't get that bit at all.

    Besides which I had a working farm at one stage for 18 years and we paid award rates, workers comp and super. No problem. It is all tax deductible.
    That bit about underpaying is a media beat up from an odd few bastards not doing the right thing.

    If it is general then that is the times isn't it and I wonder how long before our young people get some backbone and set things right.

    It isn't as if the minimum wage is all that much after all is it.

    In fact I bet my pay in 1969 beats todays in real terms.

    Neo liberalism was only just rearing it's ugly head back then. We should have cut it off when it started.

    Ayn Rand and Hayek were a bit after my time though.
    KSS
    28th Sep 2016
    7:49pm
    Actually musicveg they pay the same as if they were employing an Australian. Trouble is the local Australian kids won't do the work, won't travel to where the work is and think they deserve more than they are prepared to put in. Backpackers do a good job or the crops wouldn't get to the supermarket. Backpackers certainly don't take jobs from Australians they do the jobs Australians won't.
    MICK
    28th Sep 2016
    11:10pm
    Gentlemen: probably more a case of farmers being paid zilch for their produce. High risk, heaps of debt and Woolies and Coles get the profits.
    I can sort of understand why farmers need low rates.
    CindyLou
    29th Sep 2016
    9:32am
    I am aware of a British girl staying in Australia and to the best of my knowledge she has to work in a rural - regional are for a certain period of time as part of her extended visa conditions. As I've mentioned below, she and her Australian boyfriend worked on a farm, picking something (can't remember what), anyhow she spoke of the dreadful and expensive living conditions on site and that she and the boyfriend found cleaner and cheaper accommodation at a caravan park nearby. It's a real tricky situation, I appreciate farmers are doing it tough but on the other hand are young people being exploited ???
    Retired Knowall
    29th Sep 2016
    2:02pm
    Musicveg, our Farmers are being ripped off by the Supermarkets and beaten down by our Govt's and on top of that have to handle the harsh climate. Having relations in the Farming Industry I know first hand how hard they work to earn a living that is lower on an hourly basis than most city folk. To say they are Greedy is ignorant of the facts. Go and buy a couple of acres, plant your crops, look after them, harvest them, negotiate with the Supermarkets for the sale price, then tell me how good you have it.
    musicveg
    29th Sep 2016
    2:40pm
    I was not referring to small farmers rather those multinational farming businesses and Supermarkets greed for the dollar, I should have been more specific. I support small farmers all the time by buying direct cutting out the middle man, I hardly ever buy fruit and veg from the supermarket because I buy organic and their organics are way over priced. So really it is the supermarkets that are being greedy mostly because they pay so little to the farmers because everyone wants their food as cheap as chips. People will complain when food prices go up but never do they complain about how much their smartphones and other technology is costing them, or their holidays etc.
    Lescol
    28th Sep 2016
    2:03pm
    I suggest that this matter is another reason for dismissing this dysfunctional government. As well it shows how easily they will be compromised. I personally believe everybody should be taxed but all should be treated the same. End of issue. I would also question why they had even proposed 32% in the beginning and why 19% now? Is it only because the backpackers have no vote?

    I am a little gobsmacked with the extra $5 departure tax - this is becoming obscene and Oz rates are already excessive compared to many countries. I do hope some people remember the golden goose fable.

    cheers
    KSS
    28th Sep 2016
    2:41pm
    Lescol very often the departure tax is rolled into the ticket price so you never know how much it is. There are some countries that charge a lot, others that charge a little. Its just a part of the cost of going overseas.

    Have a look at the cost of visas. I just got my travel document for Cuba: cost if done in Canberra in person: $60. Cost if done by mail (the only other option) $129 (including money order - credit cards not accepted and don't send cash in the mail).

    The cost of getting a passport in the first place is more of an issue I would have thought. And even that is a discretionary spend and part of travelling overseas.
    MICK
    28th Sep 2016
    11:10pm
    A tax is a tax is a tax. Now what was that about "no more taxes"?
    Retired Knowall
    29th Sep 2016
    2:05pm
    The Backpackers do Vote, They do it with their feet, they go elsewhere where the tax is lower.
    Lescol
    28th Sep 2016
    4:05pm
    Yes Gra, our backpackers are subject to tax wherever and I have now worked in nearly 40 countries. Its usually called provisional tax and its claimable back at the end of the tax year or upon final departure. I believe all should pay tax BUT I cannot accept we differentiate between local and foreign. Its unfair and really, un-Australian.

    I am dismayed over this matter.

    cheers
    4b2
    28th Sep 2016
    4:32pm
    Well Malcom the meek has done it again, caved in to the far right of his party (well we cant call it his anymore, more like backbenchers party) once more. No longer can he and his snivelling treasurer ScoMo maintain the mantra we won the election and we took these policies to the polls! The are changing all of their policies they have a mandate (of 1) to the polls, except for the most costly the plebiscite.
    Bill Shorten and the greens should not vote for this plebiscite, instead they should abstain from voting on the bill in both houses. Then the onus will be on the week and mild LIBS to go ahead or get a backbone and have a free vote on the issue.
    cdbstock
    28th Sep 2016
    5:31pm
    Backpackers spend all their earnings here in Oz - & so pay our GST - but the gov't's imposition of any tax is a disincentive for backpackers to come & work in Oz - let alone the 19% proposed. So the total tax-take will be will be offset by the reduced GST (numbers of backpackers). In any case the farmers will be penalised, the tourism industry will suffer& even we all will be penalised by the higher departure tax which is proposed by the gov't to make up for the changed rate (32.5% to 19% flat)
    MICK
    28th Sep 2016
    11:12pm
    Methinks we all pay GST and income tax. In some countries you are not allowed to work so not a bad deal I might think.
    Rae
    29th Sep 2016
    9:28am
    If you can't afford a $60 departure tax you shouldn't be going.

    With the huge recent retirements and 200 000 car workers about to be let loose I would think getting pickers only requires a bit of advertising in the right places.

    All those refugees and unemployed and we can't get a crop in?

    Gosh if it means not getting the crop in I'll go pick myself.

    Just let me know where to go.

    28th Sep 2016
    7:19pm
    what would we do without all those wingers in these columns, labor brownie micky, jackie, has she ever applied to do fruit picking instead of collecting the dole, musicveg, lescol and the other wingers object to paying an extra $5.00 towards the cost of holidaying outside this country and at the same time complaining they are living below the poverty line but can't see an issue with the fruit and vegies rotting on our farms, all because our own young people refuse to help out, I say drop the dole for the younger ones unless they are prepared to work for it, I did, there was no dole at the time, it was work or starve, travelled from state to state, even worked in the sugar cane fields, and I still think back at the great times we were having, it will give them a respect for living without handouts and memories of what I now call the best times of my life.
    musicveg
    28th Sep 2016
    9:09pm
    I never complained about the extra $5 towards a holiday, I cannot afford to travel in Australia never mind overseas! I always buy Australian products and support Australian farmers buy using sites such as Farmhousedirect, I also support small local businesses who employ local people. If you drop the dole you would see a massive increase in crime, and very stressed out parents who have to feed their adult children.
    Rae
    29th Sep 2016
    9:35am
    I agree heem. We cut cane and picked for a while as itinerant workers and we were never immigrants. Fantastic fun.
    In your youth and healthy if you can't work a field all day and party half the night you will never know what life is all about.

    Those adult children need to be sent to save the crop if it has got to that otherwise buying Australian products might be hard to do.

    Of course a belief that food comes from the stores and water out of taps is a bit to blame.

    Bit hard to feed anyone musicveg if the crops all rot because people are too lazy to go and save them.
    Franky
    28th Sep 2016
    8:15pm
    Instead of getting backpackers to do work in the agricultural industry we should copy New Zealand's pacific solution and get people from the pacific islands to do our farm labour. The money they would earn goes to the grass roots in their countries and has a multiplier effect. Then we could cut out our foreign aid payments to those Pacific nations, which only end up in corrupt politician's pockets. It's a win / win!
    MICK
    28th Sep 2016
    11:15pm
    Whilst there is merit in your post I am troubled that Australia has to prop up every disfunctional society on the planet, expecially given that the money we give away has to be borrowed because we cannot balance our own books. Makes no sense other than to satisfy the heart string folk who will be the first to whine when taxes go up because their demands are being met. We live in a strange world.
    CindyLou
    29th Sep 2016
    9:24am
    A couple of thoughts on this topic;
    From my understanding and what I've been told, the backpacker workers on SOME properties are exploited, charged ridiculous amounts for dreadful accommodation on site...so perhaps this is why the jobs are rejected or avoided by Australian youth ?
    And
    In regard to an extra $5 added to departure fees, this is a tiny fraction of most people's holiday - travel costs so it's a non issue really.
    I travelled to china last year and had to go to Sydney to apply for my visa, it was quite pricey, from memory I think it was nearly $100.00. Several years ago also had to pay to get a visa for U.S., I think it was $60.
    So back to my original point, an additional $5.00 is very little in the scheme of things.
    Lescol
    29th Sep 2016
    3:54pm
    For what is it worth I am self funded retiree who has been to most parts of Australia. Soon I shall travel to Malaysia using a tier one carrier; the Oz taxes have been tallied and they represent 41% of the ticket cost.

    Given the Oz rates are already the second highest in the world I urge our politicians to remember the golden goose fable.

    cheers
    Not Senile Yet!
    29th Sep 2016
    4:38pm
    There is no need to tax backpackers at all!
    They pay 10% on every cent spent here...its xalled the GST!!!
    Add the 19% and that equates to 29% tax on income that is less than 10,000......blatant rip-off.....blatant tax grab!
    Remember....tax on alcohol (30%)& tobacco(180%) ....not to mention fuel & luxuries taxes!
    This tax is both unreasonable as well as a Money grab from those wh cannot argue!
    Disgusting when they are giving business tax cuts!
    Stop voting for these Party Puppets.....throw them ALL OUT!
    Anonymous
    29th Sep 2016
    5:49pm
    agree with you so long as they those under 25 refusing doing the work pay the 19% tax on their dole payments,
    Old Geezer
    30th Sep 2016
    5:00pm
    The government will get a bit back when they leave to go back home.

    Why aren't our young unemployed out picking?
    Not Senile Yet!
    3rd Oct 2016
    11:05am
    What Backflip???
    Still taxing them.....just less!
    Before this they simply didn't pat tax on their income directly at all...now they will have to!
    THATS NOT A BACKFLIP!
    What kinda reporting is this????
    Talk about twisting facts.....stupid headline.....stupid article!
    Backpackers do not earn enough to pay any tax simply because very few are here long enough!
    They do pay GST...10%....on everything they buy though!
    Damm it!!!!
    Why can't our Government make every Corp or Company pay a MINIMUM OF 10% TAX???
    That would fix any Budget DeFicit!