Six month delay likely on backpacker tax

Six month delay likely on backpacker tax

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Treasurer Scott Morrison in the firing line over the backpacker tax increase.

Treasurer Scott Morrison in the firing line over the backpacker tax increase.

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The government appears set to announce a six month delay to the backpacker tax increase, to allow more time to find a better policy solution.

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THE federal government is on course to delay the backpacker tax increase by six months to allow more time for stakeholder consultation to resolve the complex policy issue.

The tax on working holiday makers is set to increase to a flat 32.5 per cent rate on July 1 after it was announced in last year’s federal budget.

But the move has angered farming and tourism groups who fear it will impact seasonal worker availability.

A cabinet proposal prepared via an interdepartmental review over the past few weeks urged the government to back-down on the increase in this year’s budget.

It contained input from the agriculture and tourism sector, for a $540 million cost neutral solution to the budget.

Coalition rural MPs have also lobbied hard to force a back-down on the increase but remain frustrated their calls for changes, to protect agricultural viability, have been denied.

Federal Treasurer Scott Morrison said the government had not accepted the most recent proposal but stressed the backpacker tax issue remained “alive” and yesterday’s budget wasn’t the last word on the matter.

Speculation intensified today with a news report saying Queensland Liberal MP Warren Entsch had told Tourism Tropical NQ CEO Alex de Waal CEO that the government would delay the tax increase by six months.

Mr de Waal announced that information on the delay to the YHA Conference in Cairns which was reported by a dedicated backpacker and tourism industry news website.

However, the CEO’s office referred media inquiries to Mr Entsch who has also not responded to questions, seeking to confirm or deny the reports.

“He’s gone to ground,” one MP said, of the Liberal MP having potentially embarrassed the Treasurer by leaking the information the day after his first budget was delivered.

Coalition MPs have said the six month delay is one of the options in the pipeline to resolve the tax increase headache and was expected to be unveiled in coming weeks, during the election cycle.

It’s understood the six month delay on raising the tax to 32.5pc with no tax free threshold would be accompanied by a $40 million contingency allocation, for the budget.

Inquiries to senior government members have said Mr Morrison’s statement at his post-budget lunch today at the National Press Club in Canberra was the government’s current, official position.

Mr Morrison said the government was not contemplating the pre-budget proposal any further but stressed stakeholder consultations had occurred, on the tax changes made in last year’s budget, and were continuing.

He said it was “actually quite a complicated issue” with the government basically saying 417 visa holders were part of the economy and expected to pay tax but “it’s not clear which part of the economy”.

“Does it extend to hospitality, or is it just in agriculture, or which industry in agriculture, like abattoirs?” he said.

“It’s not particularly clear (and) there are labour market issues that are relevant (and) whether different classes of visas are necessary.”

Mr Morrison said visa arrangements were also in place to assist seasonal workers that were introduced under former Labor Prime Minister Kevin Rudd’s regime.

“There are a lot of complicated issues here and I don’t think we’ve actually resolved them at a point where I think we’ve got good policy,” he said.

“And I’m not going to back policy in that I don’t think is good policy.

“That issue remains live but the (industry) proposal, you’re talking about is not what the government is proceeding with.”

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