Fears backpacker tax increase will create worker vaccuum
BACKPACKERS on a working holiday visa are the target of a government crackdown in this year's budget, despite fears from farmers the higher tax rates will reduce the supply of labour and hurt their business.
The controversial tax change will see backpackers on a working holiday visa be slugged 32.5c for every dollar earned up to $80,000 from July 1.
Federal Member for Page Kevin Hogan said the higher tax rates were to ensure backpackers paid their fair share of tax during their time in the country.
"This rate was to ensure they pay some tax to pay for the services and infrastructure that they use while they are living and working in Australia," he said.
"The government's priorities are to ensure taxation rates are fair. This is obviously to fund hospitals, schools, roads, welfare and all the other commitments of government."
Mr Hogan said the government is in consultation with farmers and the National Farmers Federation on the issue.
Northern Rivers NSW Business Chamber regional manager John Murray said he was disappointed the tax rate was so high and without any tax free threshold.
"Backpackers are often who pick up a lot of work doing things like fruit picking, and with the tax rate increasing a fair bit in this sector we think that it's probably not going to have a good outcome," he said.
"The fact of the matter is that backpackers provide a service and fill a vacuum that exists with this sort of work, particularly in regional areas where farmers struggle to find people to pick and pack their fruit."
Mr Murray said backpackers have proven to be an asset to the agricultural industry and provide valuable labour in peak picking seasons, and the higher tax rate could discourage their participation in farm work.
NSW Farmers president Derek Schoen said the group will continue to push for backpacker tax relief, and have proposed an alternative tax rate of 19%.
"NSW Farmers was extremely disappointed the government did not resolve the backpacker tax problem in the budget," he said.
Mr Schoen said farmers are concerned the tax would limit their ability to maximise their harvest capacity and increase production costs.
"The prospect of planting or harvesting crops with no certainty that there will be sufficient labour to harvest them is holding back investment and growth in the industry," he said.
"The reality is, around 38, 000 backpackers work in agriculture each year, or around 25% of the total labour force in the industry, and if the backpackers stop coming it will be disastrous for the industry."
Mr Schoen said a reduced tax rate of 19% would put an estimated $315.7 million directly into government coffers, while generating hundreds of millions more through the ongoing success of farming operations, tourism and regional spending.
Who will you vote for in the electorate of Page?
This poll ended on 10 May 2016.
Kevin Hogan - National
Janelle Saffin - Labor
Kudra Falla-Ricketts - Greens
This is not a scientific poll. The results reflect only the opinions of those who chose to participate.