Australia

Australia to impose lower 'backpacker tax' after outcry

At present working holiday visitors do not pay any tax until their yearly income exceeds a certain amount Image copyright Ian Waldie
Image caption At present working holiday visitors do not pay any tax until their yearly income exceeds a certain amount

The Australian government says it will support imposing a 15% tax rate on working holiday visitors from overseas.

The new "backpacker tax" proposal is lower than the government's original plan for a 32.5% rate, which angered tourism and farming operators.

They feared taxing temporary workers 32.5 cents on every dollar would make it unattractive to come to Australia.

About 600,000 backpackers travel to Australia every year, many of them finding work picking fruit.

At present backpackers, like Australian workers, do not pay any tax until their yearly income exceeds A$18,200 (£11,000, $13,500).

Treasurer Scott Morrison said the government had reached a compromise deal with independent crossbenchers.

"Today the government will be working to put in place a bill which will propose 15% on the backpackers' arrangement," he said in Canberra on Monday.

"We will honour the arrangement that we've come to with Senator (Nick) Xenophon and we appreciate his continued support on this, as well as Senator (Derryn) Hinch."

Protracted negotiation

The announcement comes after more than a year of political manoeuvring between the government, opposition and minor parties.

Last week, independent senator Jacqui Lambie's proposal for a 10.5% tax rate was blocked by the House of Representatives.

Government MP Andrew Broad broke ranks on the weekend to suggest a 15% rate, declaring the issue had to be settled before the new year.

Mr Morrison said lowering the rate to 15% would cost the Australian budget A$120m over four years.

Image copyright Ian Waldie
Image caption About 600,000 backpackers travel to Australia every year

The opposition said it continued to support a 10.5% tax like New Zealand, arguing Australia risked turning away working holiday-makers.

"When European backpackers look towards Australia and New Zealand ... they just look at the headline rate," said opposition agriculture spokesman Joel Fitzgibbon.

Australia granted 214,830 working holiday visas in 2014-15. British citizens, the programme's biggest constituency, were granted 44,730 visas.

Australian working holiday visas cost a minimum of A$440 (£250, $355).

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