Federal Government urged to scrap unpopular backpacker tax

Wednesday 7 September, 2016

The Chamber of Commerce and Industry Queensland (CCIQ) has urged the Federal Government to dump the controversial backpacker tax or put the state’s tourism industry at risk.

CCIQ has joined forces with the Queensland Tourism Industry Council (QTIC) in asking Canberra not to impose unfair income tax rates on working holiday makers.


Under proposed new legislation, Working Holiday Visa holders will be taxed 32.5 cents on every dollar earned – a stark difference to the current tax-free threshold of $18,200.

CCIQ Policy Advisor Catherine Pham said the proposal would reduce Australia’s competitiveness as a working holiday-maker destination and would have detrimental impact on regional Queensland.

“The Federal Government is failing to recognise tourism is currently the lifeblood for many Queensland regional economies and has been one of the few industries propping up our economy,” she said.

“We have surprisingly transitioned much smoother than expected, from our heavy reliance on the resources sector to a more diversified economy. Without a doubt, tourism has been a frontrunner and good success story for us.

“Income growth in China coupled with a favourable Aussie dollar has seen visitor expenditure in Queensland grow to an all-time high of $18.3 billion.

“Tourism is in a boom period, which means there is higher than average spending in this industry, there are more job opportunities and the market is bringing high returns for our business. It is extremely hard to comprehend why the Federal Government would be looking to slow down this growth by making it harder for tourists to holiday here.”

Ms Pham said a recent QTIC survey showed a clear majority of businesses across Queensland expected the number of holiday-makers coming to Australia to decline if the tax was to be imposed.

“Nine in 10 businesses across Queensland agreed that the number of working holiday-makers coming to Australia will decline under the proposed taxation rate,” she said.

“The government expects $540 million over the next three years to be collected by the backpacker tax – but the expected decline in visitation and spending, as well as the reputational damage, really puts that figure into question.”

Ms Pham said many regional areas of Queensland had found it hard to find local employees to fill vacancies and had relied on this market to fill the skill shortages.

“Considering that over half of the businesses who responded to the survey said they had employed working holiday makers in the past 12 months, there is no doubt any decline in this market will see businesses experience greater difficulty in finding staff. Over 65 per cent of businesses say the availability of labour will be impacted.

“Studies have found there is a positive net impact on employment, indicating that although 0.51 jobs are taken by working holiday makers, there is a gain of 0.61 full year jobs through their spending. With a net increase of 17,661 jobs, it is unlikely that the revenue raised by the proposed backpacker tax (average of $135 million per year) could create this number of jobs without direct intervention.

“The last thing we want is for Australia to be sending out a message to the world asking backpackers to come here to work and pay, but no longer play.”

The joint CCIQ-QTIC submission can be read here: https://www.cciq.com.au/advocacy/submissions/

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