FEDERAL Treasurer Scott Morrison has signalled he won’t be back-flipping on the new backpacker tax regime that’s due to start on July 1.
The National Farmers Federation launched a new campaign today demanding the tax change for working holiday-makers - which was announced in last year’s federal budget - be softened.
The NFF and other farming sectors, including horticulture, have warned the tax change would erode the agricultural workforce and damage regional communities.
Under current 417 working holiday visa conditions, backpackers are eligible for a tax-free threshold of $18,200 then pay a rate of 19pc up to $37,000 and 32.5pc up to $80,000 – but the average earns $15,000 while in Australia.
In a statement outlining the campaign’s intentions, the NFF said it agreed backpackers who make an average $15,000 during their stay in Australia, should pay tax.
But the peak farming body said an effective tax rate of 19pc - achieved through deactivation of the tax-free threshold - would be fairer for both backpackers and the industries which rely upon them, like agriculture.
Federal Agriculture and Water Resources Minister Barnaby Joyce has not yet commented on the NFF’s demands to change the tax rate and expression of potential concerns about loss of farm workers.
But Mr Morrison said the government believed that foreign workers should pay their fair share of tax in Australia.
He said being a working holiday maker does not mean you get a tax holiday.
“If you work here you should pay your tax here,” he said.
“The 2015-16 budget working holiday maker changes are an initiative aimed at strengthening the tax system to ensure that it is fair and sustainable for Australians.
“Most working holiday makers do not pay a single dollar of tax in Australia, despite using our services, such as health and emergency facilities, and earning an income here.”
Mr Morrison said the main purpose of the visa program was to foster cultural exchange by allowing eligible participants to visit Australia for an extended holiday.
He said any work undertaken during that extended visit was expected to be secondary to this broader purpose.
Mr Morrison said there are other programs and visas that are more appropriate for people who primarily want to work in Australia.
He said the Coalition government had already announced changes to encourage working holiday maker visa holders to secure work in northern Australia.
“Those who secure work in certain high demand industries in northern Australia can now remain with their employer for up to 12 months,” he said.
“In addition, further changes will follow this year to allow Work and Holiday (Subclass 462) visa holders to extend their stay in Australia by a further 12 months if they work for at least three months in agriculture or tourism in northern Australia.”
In launching the online campaign and petition, But NFF Workforce Productivity Committee Charlie Armstrong said backpackers were critical to ensuring an adequate workforce was available to primary producers, particularly at busy times of the year.
“The agriculture industry relies on backpackers to fill severe labour shortages which are often seasonal and temporary, for example, when crops are being harvested or milk production is at its peak,” he said.
“Each year, backpackers contribute around $3.5 billion to the Australian economy and around 40,000 find employment on Australian farms.
“Taxing backpackers at a rate of 32.5pc will make work in Australian agriculture a highly unprofitable proposition.”
Mr Armstrong said the higher tax rate would lead to reduced agricultural productivity and strip regional communities and businesses of much needed tourism spending.
Mr Armstrong was contacted for comment on the Treasurer’s comments.