27/09/2016 - 14:20

Backpacker tax reduced, travel fees to rise

27/09/2016 - 14:20

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Western Australia’s hospitality and agricultural industries have welcomed the federal government’s decision to amend its planned backpacker tax, but the tourism body says it will cost the state jobs nevertheless.

Working holiday visa holders will be taxed 19 cents on the dollar on earnings up to $37,000.

Western Australia’s hospitality and agricultural industries have welcomed the federal government’s decision to amend its planned backpacker tax, but the tourism body says it will cost the state jobs nevertheless.

Federal Treasurer Scott Morrison confirmed today that plans to remove an $18,000 tax-free income concession and introduce to visitors on working holiday visas a 32.5 per cent tax from the first dollar they earned had been scrapped.

Instead, working holiday visa holders will be taxed 19 cents on the dollar on earnings up to $37,000, at which point they will be taxed normal rates.

The change, which comes into effect from January next year, has been welcomed as a win for WA by Australian Hotels Association chief executive Bradley Woods, who said the hospitality and accommodation industries’ reliance on working holiday makers would have otherwise been substantially damaged.

“The number of working holiday visa travellers to WA fell in the last year by 11.3 per cent and the total number of nights they spent in the state dropped 19.2 per cent for the year ending June 2016,” Mr Woods said.

“Australia competes globally for backpacker tourism and the proposed tax clearly had an impact on working holiday makers coming to Australia at a time when the government’s own commissioned survey identified the need for 123,000 additional workers in the hospitality and tourism industry by 2020.”

However, in order to cover the loss of revenue set to be gained from the backpacker tax, Australians travelling overseas will have to pay an extra $5 on airline tickets, with the Passenger Movement Charge to be increased from $55 to $60.

The charge is imposed on passengers when they fly out of Australia.

This sparked criticism from Tourism Council WA chief executive Evan Hall, who argued that the charge would make it the highest tourism tax in the world.

“Any increase on the charges for travellers will result in fewer leisure visitors coming to Australia,” Mr Hall said.

“Every lost international visitor results in a loss of $2,560 in visitor expenditure.

“If 0.5 per cent of people who would have travelled to Australia are put off by the higher airfares, it would result in a loss of 4,400 visitors, $11 million and 80 jobs per year.

“Tourism is an export in a highly competitive international market, and every time you tax an export you lose to other markets.”

He said the shortfall shouldn’t be paid for by increasing taxes on international visitors.

“While a 19 per cent tax rate is better than 32.5 per cent, it will still have a detrimental impact on the tourism industry,” Mr Hall said.

WAFarmers chief executive Stephen Brown hailed the government’s decision as a significant win for the agricultural industry.

“Given backpackers contribute approximately $3.5 billion to the Australian economy and boost both productivity in the agricultural sector and tourism spending, the original proposal had the potential to cause significant damage,” Mr Brown said.

“Increased competitiveness in application fees and age eligibility will work towards securing a workforce that continues to see Australia as a destination of choice.

“We have always considered a 19 per cent tax rate to be a reasonable concession, and we look forward to working alongside government to ensure our supply of working holiday makers not only continues, but thrives.”

Other changes announced include a $10 million boost to Tourism Australia to advertise the nation to working holiday makers, as well as a reduction in visa costs and increasing the age limit of visa applicants to 35 years old.

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