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Backpacker tax: Labor proposes cutting rate to 10.5% to end impasse Backpacker tax: Labor proposes cutting rate to 10.5% to end impasse
(about 4 hours later)
Labor has agreed to support the government’s backpacker tax legislation if the proposed rate is cut from 19% to 10.5%.Labor has agreed to support the government’s backpacker tax legislation if the proposed rate is cut from 19% to 10.5%.
The opposition also wants to scrap the proposed $5 increase to the charge for all travellers leaving Australia.The opposition also wants to scrap the proposed $5 increase to the charge for all travellers leaving Australia.
Labor will move an amendment to the bills in the Senate and will support the rest of the package if those two changes are accepted.Labor will move an amendment to the bills in the Senate and will support the rest of the package if those two changes are accepted.
Labor leader Bill Shorten said on Tuesday the tax stalemate was a “complete mess of the government’s making” and it now had an opportunity to fix things. The Labor leader, Bill Shorten, said on Tuesday the tax impasse was a “complete mess of the government’s making” and it now had an opportunity to fix things.
But the Nationals leader, Barnaby Joyce, has dismissed Labor’s proposal, saying it is designed to create chaos and dissent.
“They revel in the problems, they revel in the intrigue, they revel in creating chaos,” he said. “They know full well what their objective is.”
The Greens’ Treasury spokesman, Peter Whish-Wilson, said the Greens would propose its own amendment to the government’s bills before it considers Labor’s plan.
“We’d rather see no tax on backpackers, or [to see] them pay the same tax as Australians pay,” he said.
“But if 10.5% is the best compromise we can get then that’s something we’ll consider.”
Chris Bowen, the Shadow Treasurer, said Labor’s proposed amendments would have to be passed by the House of Representatives, and that meant political pressure was now on the Nationals Party.
“Nationals Party MPs will have the choice,” he said. “Do they support 19%, or do they support 10.5%? And they need to explain to their electorates, if they vote for 19%, why they do.
“The pressure is on individual National Party members of parliament and we’ll be pointing that out.”
Bowen said Labor’s proposal to cut the backpacker tax to 10.5% would cost the budget $205m over four years, and it would cost $260m over four years to scrap the $5 passenger movement charge.
But that would be more than offset by the $1.4bn in savings from its superannuation announcement.
“We are net ahead in our announcements today. We are being extremely fiscally responsible in our approach to these matters,” he said.
Sarah McKinnon, from the National Farmers’ Federation, criticised the latest policy development.
“We want it fixed this week. We want certainty in the parliament this week,” McKinnon said.
“We need all parties to come together, to claim that bipartisanship that they say so strongly they support, to support Australian farmers ... to deliver certainty.”
The fight over the backpacker tax has been going on for 18 months.The fight over the backpacker tax has been going on for 18 months.
It started with the former Abbott government’s 2015 budget, which proposed raising the income tax on working holiday makers from 13% to 32.5%.It started with the former Abbott government’s 2015 budget, which proposed raising the income tax on working holiday makers from 13% to 32.5%.
The idea was dormant for over a year, before Malcolm Turnbull announced a review of the tax in the lead-up to this year’s election. The idea was dormant for over a year before Malcolm Turnbull announced a review of the tax in the lead-up to this year’s election.
In September, the treasurer, Scott Morrison, announced a 19% tax rate, with a $5 increase in the passenger movement charge to $60.In September, the treasurer, Scott Morrison, announced a 19% tax rate, with a $5 increase in the passenger movement charge to $60.
To balance the package, the government also proposed to reduce the visa application charge by $50, increase the working holiday visa age from 30 to 35, and increase the time backpackers could work for one employer from six to 12 months.To balance the package, the government also proposed to reduce the visa application charge by $50, increase the working holiday visa age from 30 to 35, and increase the time backpackers could work for one employer from six to 12 months.
Uncertainty over the tax rate for backpackers has angered the agriculture industry, with farmers saying it has made it much harder to attract workers. Uncertainty over the tax rate for backpackers has angered the agricultural industry, with farmers saying it has made it much harder to attract workers.
Joyce said if Labor did not support the government’s proposal to cut the backpacker tax from 32.5% to 19%, the tax would remain at 32.5% from 1 January, 2017.
But Whish-Wilson said there was no reason why that should be the case, according to advice from the Parliamentary Library and correspondence from Treasury and the Tax Office.
“Let me tell you, Barnaby standing up here and saying that the default is going to be 32.5% is absolutely bullshit, it’s not the case,” Whish-Wilson said.
“Some backpackers will be legally entitled to pay no tax for their first $18,200 [earned], depending on their residency.
“The only way this [current 32.5% tax] could become the default rate is if the Australian Tax Office decides to crack down on this issue of residency, do audits, and actually seek the revenue.”
Labor Senator Chris Ketter, who was deputy chair of the Senate committee that investigated the backpacker tax, said Labor’s proposal would be a win for farmers and tourism operators.
“I participated in a number of hearings on the backpacker tax and it was clear to me that the government had failed to properly consult with stakeholders,” he said.
“They even failed to consult Treasury with regards to economic forecasting.
“The original rate of 32.5% was clearly too much and their alternative proposal of 19% was rushed,” he said.
The committee will deliver its report on the backpacker tax on Wednesday.