Backpacker tax plan: Australia is likely to settle for 15%

The government of Australia has been facing a lot of criticism from the tourism sector and the farmers of the country for its backpacker tax plan. Recently, Scott Morrison announced that the Coalition has decided to extend help to the foreign workers, the agricultural and tourism sectors of the country by keeping the tax rate as low as 15 percent.

Australia receives about 600,000 backpackers who move to the country from all over the world for work purposes annually. The farmers benefit from this continuous labour supply. However, the government's 32.5 percent tax imposition on the backpackers annoyed them. The farmers expressed their fear of losing effective labour due to the new tax rate. According to BBC News, the people in the tourism sector were also of the same opinion as they feared that the new tax plan would discourage tourists from visiting the country.

Keeping these issues in mind, the 32.5 percent tax rate was lowered to 19 percent until recently. Treasurer Morrison has announced that the government is likely to keep the tax rate as low as 15 percent. He has assured the farmers that the issue will be “sorted this week.” Although Morrison has blamed the Labor Party for the delay in settling the issue, Shadow Treasurer Chris Bowen has said that Morrison has been “immature” in his ways of handling things.

The government has further decided to make certain other changes in order to draw the attention of the backpackers towards Australia. There was a possibility that the cost of the backpacker visa applications would be lowered by $5o to $390, it was reported in September. The initial tax plan was put forward in the 2015 budget to collect over $500 million, but it would not be possible after the reduction in the rates. Therefore, the government is going to make up for the deficit amount by increasing $5 on the taxes of passengers leaving the country.

The revised tax plan will become effective from Jan. 1, 2017.