Aussie tourism to take a hit from backpacker tax?
The controversial backpacker tax, which would see overseas workers taxed at 32.5 cents in every dollar, may drive travellers away from Australia and impact the tourism industry.
Now set to be implemented from January 1 next year, the tax would mean that foreigners in Australia on a working holiday visa would be classified as non-residents for tax purposes, preventing them from claiming the tax-free threshold.
Under the scheme, a worker earning $22,000 would lose $7,150 of it to tax (32.5%) - the highest rate for any type of worker in Australia. By comparison, a federal politician pays a 31.25% tax rate, a professional worker pays 21.9%, while unskilled workers are hit with just 9.7% tax, The Weekly Times reported.
This steep tax rate is likely to cause backpacker numbers in Australia to drop, as people planning a working holiday look elsewhere for a cost-effective destination.
ABC News talked to Ben Vincent, a working traveller from Swaziland, who confirmed that Australia would not have been his destination of choice, had the tax been in place when he was planning to travel.
"If I had heard coming here and working here I would get nailed for 30 per cent of my wage, I probably would have chosen Canada," he said.
British traveller Chris Armstrong, who has been working to fund his travels, also told ABC news that the tax would have deterred him from travelling to Australia.
"If I heard about it before I arrived in the country I wouldn't be here," he said.
He also emphasised that the money earned by backpacking workers largely went back into Australian businesses - "Every dollar I earn goes back into the economy here – I spend it on food, petrol, my car, housing."
The tax has spurred some Aussies to offer up alternative budget travel options to backpackers, such as The RoomXchange, a Melbourne start-up that allows backpackers to trade up to 15 hours of housework a week in exchange for accommodation and food in a host's home.
Meanwhile, the National Farmers’ Federation is lobbying for the tax to be cut to 19%, but Queensland’s tourism minister, Kate Jones has other ideas.
"The backpacker tax doesn't need tinkering around the edges, it must go altogether," she said.