Tax will turn backpackers away from the West

The new backpacker tax is set to come in to place in July this year.

The new backpacker tax is set to come in to place in July this year.

New taxation laws could see foreign backpackers avoid rural and remote areas due to the cost of travel and poorer earning potential.

Both foreigners and farmers are up in arms over the changes that will see backpackers pay a massive 32.5 per cent tax on every dollar they earn working in Australia.

Queensland Farmers’ Federation (QFF) President, Stuart Armitage, says that higher taxes will take away the incentive for backpackers to work on farms and in regional areas.

“There will be a shortage of backpackers to pick fruit and vegetables or to work in any agricultural enterprise West or North of Brisbane and the Sunshine coast,” he says.

“They won’t want to work out in the West because it costs too much to get out there.”

 

The changes set out in the 2015 budget will see backpackers classified as non-resident income earners and unable to claim exemptions under the tax-free threshold.

The new taxes are set to come into place on the 1st of July, but farmers are already seeing a downturn in the number of oversees workers.

“Queensland agriculture industries such as cotton and horticulture are already feeling the effects of this reduction in international workers with the current trend of 12 per cent fewer backpacker arrivals to Australia each year,” Mr Armitage says.

Backpackers are the backbone of Queensland’s agricultural industry, making up approximately 40 per cent of the cotton picking labour force and 80-90 percent of the fruit picking labour force.

Chair of the NFF Workforce Productivity Committee, Charlie Armstrong, says that the new taxes will have a significant impact on the Agricultural sector.

“Taxing backpackers at a rate of 32.5 per cent will make work in Australian agriculture a highly unprofitable proposition,” he says.

But the implications don’t stop at the farm gate.

Mr Armitage says that the taxes are bad news for the entire economy, with foreign workers having disposable income to spend on travel and tourism.

“Realistically when you look at backpackers they come to Australia to work and to make money so they can see the tourist parts of Australia. So it’s great for the economy of Australia.

“The backpackers will come in with ten dollars in their pocket, earn money spend all the money and go home with five dollars in their pocket,” he says.

With not enough hands to do all the picking, the taxes could also mean that more produce is left unpicked and overripe which will translate to shortages on supermarket shelves.

The QFF has launched a petition opposing the changes.