TAX SCRAPPED: Hinkler MP and assistant minister to the deputy prime minister, Keith Pitt.
TAX SCRAPPED: Hinkler MP and assistant minister to the deputy prime minister, Keith Pitt. Eliza Goetze

UPDATE: Backpacker tax 'victory for common sense'

UPDATE 7PM: FOR Allan Mahoney, the government's change of mind is a victory for common sense.

The chair of Bundaberg Fruit and Vegetable Growers has taken part in more than a dozen meetings this year trying to reach a compromise, fighting alongside horticulture industry body Growcom, the Queensland Farmers' Federation and Tourism Queensland.

"We all wanted the same outcome," he said.

"It was great to see everyone working together."

For the region's farming community, the decision couldn't have come fast enough.

"There is so much planning and programing that has to be done for the summer and autumn harvest," Mr Mahoney said.

"The Treasury was certainly dragging the chain but Keith Pitt put his best foot forward, flying the flag for our region."

In a press conference yesterday Mr Pitt said the 32.5% was "certainly not" his idea.

Bundaberg farmers are already struggling to source backpackers amid fears word of the looming tax had spread across the world.

BACKPACKER TAX: Visa workers could be deterred from picking in places like Tinaberries farm in Bundaberg. Photo: Paul Donaldson / NewsMail
BACKPACKER TAX: Visa workers could be deterred from picking in places like Tinaberries farm in Bundaberg. Photo: Paul Donaldson / NewsMail Paul Donaldson BUN050916TAX8

"We hope the uptake is just as quick to spread the good message," Mr Mahoney said.

Of other measures introduced to make up for the lower tax, he said, "I've been searching for a catch, but I haven't found one."

Treasurer Scott Morrison yesterday announced a revised tax rate of 19 cents in the dollar for backpackers on 417 and 462 visas.

While many stakeholders have argued the Treasury has "dragged the chain" on the issue, Member for Hinkler and Assistant Trade and Tourism Minister Keith Pitt said the issue was "a very complicated matter".

"417 and 462 visa holders are from countries with which we have reciprocal arrangements," Mr Pitt said.

"To make changes takes some time and we will require legislation to put this into effect."

The $18,200 tax free threshold will no longer apply to backpackers and to compensate for the $500m revenue expected from the 32.5% tax, the passenger movement levy, which applies to all travellers departing Australia, will rise by $5 to $60.

"We will also commit $10 million to Tourism Australia over the next two years towards attracting more of these people who not only fill a labour gap but they are tourists; we want to ensure we take every dollar from their pockets for local businesses before they leave."

To crack down on farmers turning to the cash economy, employers of 417 and 426 workers will be required to register with the tax office, and a further $10m will be dedicated to enforcing fair work for backpackers.

EARLIER: Bundaberg farmers are breathing a sigh of relief.

The Federal Government has backed down on its proposal to hike the tax on working holidaymakers to 32.5%, caving to months of protest by farmers and tourism hubs across Australia.

The ABC is reporting that instead, the $18,200 tax free threshold will no longer apply to backpackers and they will be taxed at a lower rate from the first dollar they earn, while the government will increase the passenger levy by $5 to make up for the $500 million in revenue the tax hike was expected to generate.

The tax change proposed earlier this year was met with outcry from fruit and vegetable growers who argue they rely on backpackers as an intermittent labour force.

This month Bundaberg farmers including Tinaberries strawberry growers revealed holiday workers were already proving harder to find, as social media spread the word of the looming change.

BACKPACKER TAX: Bruce Mcpherson has strong views on how the changes will affect Tinaberries farm in Bundaberg. Photo: Paul Donaldson / NewsMail
BACKPACKER TAX: Bruce Mcpherson has strong views on how the changes will affect Tinaberries farm in Bundaberg. Photo: Paul Donaldson / NewsMail Paul Donaldson BUN050916TAX1

"We don't use machinery to pick our fruit, we rely on manual labour; they're effectively taking our harvester off us," Tinaberries co-owner Bruce McPherson said.

Treasurer Scott Morrison has announced the tourism sector will get $10 million to market jobs to backpackers.

Deputy Prime Minister Barnaby Joyce is expected to make an official announcement today.

Bundaberg Fruit and Vegetable Growers chairman Allan Mahoney said he would reserve comment until after the announcement.

More to come.



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