AUSVEG, Australia’s peak industry body for the vegetable industry, has called on the Federal Government to repeal the controversial Backpacker Tax in full, following the Federal Court’s decision that it cannot be applied to citizens of eight countries with whom Australia has an international treaty obligation not to tax citizens of these countries at rates higher than those paid by Australians.
AUSVEG CEO James Whiteside said the Backpacker Tax was flawed from the beginning and should be repealed in full to avoid any confusion among backpackers and employers.
“It is disappointing that the decision to implement the Backpacker Tax, which industry campaigned hard against for a long period of time, highlighting the issues it would cause, actually made it this far and had to be challenged in the Federal Court,” Mr Whiteside said.
“You would think that Government would have done its proper due diligence before implementing such a divisive tax in the first place. The only sensible thing to do now is to repeal the entire tax.”
The decision applies to Working Holiday Makers from the United Kingdom, the United States, Germany, Finland, Chile, Japan, Norway, and Turkey who are Australian residents for taxation purposes due to an international treaty signed between the countries.
At the time, industry argued that introducing a Backpacker Tax would deter Working Holiday Makers from coming to the country and have a severe impact on the horticulture industry. The tax was originally set to be at 32.5 per cent but settled at 15 per cent when it was implemented in 2016.
The number of backpackers coming to Australia has dropped since 2012-13 when more than 258,000 travellers came down under on 417 and 462 visas. Now that figure is down to just over 209,000.
“The horticulture industry has a significant labour shortage and has been working closely with the Government to amend visa rules to increase access to foreign workers. This shortage has been exacerbated by the confusion surrounding the Backpacker Tax,” Mr Whiteside said.
“Repealing the tax in full might at least go some way in bringing some confidence back to backpackers who wish to travel to Australia and a basic incentive that if they come here they are free to experience what Australia has to offer without the burden of being taxed.
“Government must have a common-sense approach to this issue and amend what was an incredibly bad policy from the beginning.”