Sydney property prices are given too much attention by the government
A plot of land is shown as sold in Sydney's newly-developed beachside suburb of Green Hills, February 2, 2015. The Reserve Bank of Australia (RBA), which held its first policy meeting of the year on Tuesday, announced a lowered official interest rate to 2.25%. Picture taken February 2, 2015. Reuters/Jason Reed

The Coalition government has been accused of making backpackers and foreign investors pay more tax under Australia’s 2015 budget. People on working holidays in the country will be taxed from the first dollar they earn instead of claiming the $18,200 threshold.

The new measure is expected to bring Australia $540 million over four years. The government is planning to raise $437.1 million in revenue by raising the cost of visa application from July. The move has earned the ire of the tourism lobby in the country.

Margy Osmond, the Tourism and Transport Forum chief executive, claimed the government is dumping more than half a billion dollars of new fees and charges in the tourism industry. She warned that Australia’s global reputation could be damaged with the higher taxes, reports The Guardian.

“With higher taxes and charges and no new money for tourism marketing, Australia is fighting with one hand tied behind its back,” said Osmond. She believes it would be “simply ridiculous” to take more than half a billion dollars from the visitor economy with a new and higher tax for backpackers.

Osmond said taxing working holiday makers from the first dollar instead of treating them equally like other resident taxpayers is a “backward” step. She added that the TFF had pushed for an increase in Australia’s marketing funds in real terms since there was tough competition for the tourist dollar. Osmund recommended a reduction in the costs of visas from key tourism markets like China to increase Australia’s appeal to visitors.

Australian Treasurer Joe Hockey has brushed off criticism and said backpackers get to enjoy a tax-free threshold of nearly $20,000. “We don’t want to increase taxes on Australians, but we do want everyone to pay their fair share along the way,” added Hockey.

Aside from backpackers, foreign investors in Australia will also face an increase in the cost of application fee to purchase from $5,000 to $10,000. Fly-in, fly-out workers will also need to meet stricter eligibility requirements for tax breaks associated with residing in isolated areas.

Under the 2015 budget, Australians living overseas will be targeted. Beginning January 2016, overseas Australians with university debts will be required to start paying their dues once they have an income of more than $53,345, reports the Australian Financial Review.

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