FARMING groups are demanding federal Treasurer Scott Morrison back-down on imposing a new backpacker tax increase saying it will erode the agricultural workforce and damage the prosperity of regional communities.
The National Farmers’ Federation (NFF) will today launch a new campaign warning the federal government against proceeding with the proposed tax hike, announced in last year’s federal budget.
The NFF offensive is being supported by members like Cotton Australia which also holds serious concerns about the potential loss of season workers.
The campaign’s launch has been timed to coincide with federal parliament resuming for 2016 in Canberra.
It contains an online petition and social media platform driven by the #backpackertax hashtag, to harness community support against pending changes to the way backpackers are taxed under 417 working holiday visa conditions.
The digital petition at change.org demands the Federal Treasurer not change the tax rules for backpackers and to “consult with the community instead as part of the broader Tax Reform agenda”.
From July this year, under the new tax regime, all working holiday visa holders are due to be taxed as non-residents at a rate of 32.5 per cent on all income.
In a statement outlining the campaign’s intentions, the NFF said it agreed backpackers who make an average $15,000 during their stay in Australia, should pay tax.
But the peak farming body said an effective tax rate of 19pc - achieved through deactivation of the tax-free threshold - would be fairer for both backpackers and the industries which rely upon them, like agriculture.
NFF Workforce Productivity Committee Charlie Armstrong said backpackers were critical to ensuring an adequate workforce was available to primary producers, particularly at busy times of the year.
“The agriculture industry relies on backpackers to fill severe labour shortages which are often seasonal and temporary, for example, when crops are being harvested or milk production is at its peak,” he said.
“Each year, backpackers contribute around $3.5 billion to the Australian economy and around 40,000 find employment on Australian farms.
“Taxing backpackers at a rate of 32.5pc will make work in Australian agriculture a highly unprofitable proposition.”
Mr Armstrong said the higher tax rate would lead to reduced agricultural productivity and strip regional communities and businesses of much needed tourism spending.
“Already we are seeing signs that the proposed tax rate of 32.5pc is scaring working holiday makers away from Australia,” he said.
“In nations like Canada and New Zealand, they are just as likely to be able to find farm work that attracts substantially lower amounts of taxation.
“Any further decline will only exacerbate the current trend of 12pc fewer backpacker arrivals to Australia each year.”
NFF said the government had estimated implementation of a 32.5pc tax rate would raise $540 million of the forward estimates while a rate of 19pc would generate $315.7 million.
But Mr Armstrong said any perceived budget losses at 19pc tax rate would be “dwarfed” by the serious economic impacts of reduced backpacker tourism and associated agricultural losses, caused by a 32.5pc rate.
“What is the point of increasing revenue through the implementation of this tax only to strip back the contribution of agriculture, tourism and regional spending to the economy?” he said.
“We urge farmers and other industry stakeholders as well as the broader public to join us in demonstrating the importance of backpackers to agriculture, tourism and the regions by signing the online petition.”
After last year’s budget, Shadow Treasurer Chris Bowen highlighted the higher income tax to be imposed on backpackers, in accusing the then Abbott government of taxing Australians at higher levels than any time since the Howard government.
“Before the last election, Tony Abbott said there would be no new taxes and that they would lower the tax burden,” he said.
“Those promises were well and truly broken at the first Budget and the broken again in the second Budget.”
Mr Bowen said the former Treasurer’s second budget included at least $3.9 billion in new taxes, tax rises and charges, while citing the backpacker tax and $735m in new taxes on foreign investment.
He also referred to increases in agricultural production levies, including a new chicken tax, a new honey tax and a new banana tax.
“No amount of referring to new taxes and charges as ‘modernisation’ or ‘integrity’ measures stops the fact that they are revenue measures which prop up the Government’s ailing budget bottom line,” he said.
Last week, Cotton Australia said it and other farm groups would be writing to the Treasurer - who has prime responsibility for the policy - and other politicians asking them to reconsider and compromise on the plan, to increase the tax.
Cotton Australia also encouraged its members and other stakeholders to express their concerns about the tax increase, by providing an online template, to help write to politicians.
Yesterday, the Queensland Farmers’ Federation distributed the online petition to its members urging their support while horticultural groups have also expressed concerns about potential loss of vital labour, via the backpacker tax increase.
* Treasurer Scott Morrison and Agriculture and Water Resources Minister Barnaby Joyce have been contacted for comment.
