Backpacker Tax Decision Imminent

[Guest The Pom Queen]

A decision on the backpacker tax appears imminent, with Coalition sources suggesting the tax could be cut from the proposed 32.5% rate to 18%-19%.

 

The National party leader and acting prime minister, Barnaby Joyce, told ABC radio on Monday morning the matter would be quickly resolved.

 

“We are going to come to a resolution on the backpacker tax,” Joyce said. “We don’t delay a tax that cost the nation $40m if we weren’t going to try and resolve the situation. We are.”

 

The farming and tourism industries were blindsided after the 2015 budget when the Coalition announced that, from 1 July 2016, holidaymakers would be treated as non-residents and taxed at 32.5% from their first dollar.

 

The measure was expected to raise $540m – delaying the implementation from 1 July 2016 to 1 January 2017 has already cost the budget $40m.

 

Currently, backpackers can access the tax-free threshold, the low-income tax offset and the lower tax rate of 19% for income above the tax-free threshold up to $37,000.

 

After vocal opposition from the farming and tourism groups, the Coalition announced a review of the tax during the election campaign. But the government maintained it did not necessarily mean the government would dump the tax.

 

Under the tax review, Deloitte Touche Tohmatsu was appointed to conduct independent stakeholder engagement and work up a range of options. The Coalition received Deloitte’s report on Friday.

 

Joyce said he and the treasurer, Scott Morrison, would take a submission to cabinet, while the assistant minister Nationals MP Luke Hartsuyker was working on “bringing something formidable forward”.

 

A spokesman for Hartsuyker would not comment on whether a compromise of 18-19% was being considered.

 

He said the Coalition understood working holiday makers were a vital source of labour, particularly in the agriculture and tourism sectors.

 

“The review of working holiday visas is considering this issue alongside a broad range of related issues to ensure that policies supporting the seasonal and temporary labour market protect vulnerable workers and keep Australia globally competitive into the future,” Hartsuyker said.

 

Before July’s federal election, the Queensland Liberal National party MP George Christensen had threatened to resign if the backpacker tax was not dropped – a threat reported only in recent days.

 

On Monday, Christensen predicted on his Facebook page the tax would go, although he used a rate of 31.5% instead of 32.5%.

 

“The 31.5% backpacker tax is soon to go, meaning local farmers will still have access to a workforce. We are in there, fighting for outcomes like this every day.”

 

Joyce said he had had meetings with Christensen, whom he described as a “good bloke” and a “strong player within the National party”.

 

Joyce – who himself crossed the floor 28 times to vote against his party – said he wanted to ensure he could “keep our team together”.

 

“I’ve been through this situation before,” Joyce told the ABC. “Bob Katter was a strong player within the National party and he did leave and that is the last thing I want.

 

“I want to make sure we keep our team together. I know George believes we are a vastly better alternative to the Labor-Greens-independent alliance, which is what you are going to get if the Coalition is not there. We have had a crack at that.

 

“I know George is not going to say, ‘well that’s a better form of government’.”

 

On Monday, Morrison said he had had discussions with colleagues, including Christensen, but again warned savings would have to be made elsewhere if the tax was changed.

 

“If there are changes to be made, it is my view as treasurer they will be made in a way that does not disadvantage the budget,” Morrison said.

 

Morrison said Christensen had told him the statements attributed to him at the weekend were made well before the election.

 

The Queensland tourism minister, Kate Jones, said the latest international visitor data showed the tax was already turning backpackers away before it is even introduced.

 

“Since the tax was announced we have seen working visa holiday visitor nights down by close to 9% in Queensland,” Jones said. “In the year to June 2016, Queensland recorded 12.3m backpacker visitor nights down from 13.5m in the 12 months to June 2015.

 

“We also saw the total number of backpackers visiting Queensland drop from 338,000 to 331,000 over the same period.”

 

Jordan Brooke-Barnett, a spokesman for Ausveg, the body representing vegetable growers, said the industry could “live with” a rate between 15% and 19%, which would be internationally competitive.

 

“We are keen to see review as quickly as possible,” Brooke-Barnett said. “We want take the heat out of the policy and we have a firm commitment from government there will be some kind of resolution. An internationally competitive rate would be between 15-19% and we could live with that.”

 

He warned backpackers were planning their travel for the next 12 months and informal feedback to the industry from backpackers and growers was that the policy would affect their plans.

 

Last week Ausveg was in Canberra to lobby the government and met a number of National party MPs as well as the Greens and independents, including Jacqui Lambie.

[flag of convenience]

National Party unlikely to wear it as stands. The question will be will the Lib's allow themselves to be dictated to by their country cousins and scrape it in its entirety? Or seek some compromise and settle for a lesser impost?