A BACKPACKER hostel owner believes the Federal Government's "backpacker's tax" will be detrimental to Mackay and the Whitsundays' multi-million dollar tourism industry.

From July 1 the Federal Government are proposing to tax working holiday makers 32.5 cent on every dollar earned.

Gecko's Rest owner Cheryl Christian said backpackers were already struggling to find work, with some not able to find work on farms.

About 12-18 months ago, she said she was able to find six people a job by lunch time whereas now she may not even be able to find them a job at all.

"They like to earn a bit of money, so they can stay a bit longer and spend the money here," she said.

Mackay Tourism interim general manager Rick Matkowski said from September 2014 to September 2015 Mackay had about 42,000 international visitors spend a total of $28.6 million in our region.

"The new backpacker tax would have a detrimental impact on the number of backpackers firstly coming to Australia and secondly their length of stay," he said.

"Whilst in the community, they go to our supermarkets, service stations, clubs and pubs and sporting facilities as well as visit our natural attractions.

"We are deeply concerned about the proposed removal of the tax-free threshold for Working Holiday Visa visitors who will be slugged with a 32.5% marginal tax rate from the first dollar earned.

"This will take disposable income from backpackers who will spend less in regional destinations such as Mackay, affecting the communities and small businesses."

Scottish backpacker Jemma Connors has applied for work as a chef at a restaurant in Victoria and said she would stay regardless of the tax.

"It's a high wage here already… but it's not the money that's brought me here," Ms Connors said.

"I want to stay here. Who wouldn't want to live in Australia?"

German backpacker Lisa Miksche has worked as a fundraiser for Cancer Council and says living in Australia would be worth it, even with a lower wage.

"The people are different here, more friendly," she said.

Changed rules for working holiday makers

A non-resident individual earning $40,000 in the current tax year would be liable for $4,547 in personal income tax, leaving an after-tax income of $35,453.

Under the proposed arrangements, this individual would be liable for $13,000 in personal income tax, leaving an after tax income of $27,000.



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