The government has been accused of forcing Australia to fight for tourism dollars with “one hand tied behind its back” by making backpackers pay more tax.
Under the 2015 budget, people on working holidays in Australia will be taxed right from the first dollar they earn instead of being able to claim the $18,200 threshold. The measure is forecast to bring in $540m over four years.
The government will also raise $437.1m in revenue over four years by increasing visa application costs from July, earning an angry rebuke from the tourism lobby.
The Tourism and Transport Forum (TTF) chief executive, Margy Osmond, has accused the government of slugging the industry more than half a billion dollars in new fees and charges.
She said people who come to Australia on working holidays, such as backpackers, spend an average of $13,000 while in the country and she warned Australia’s international reputation could be damaged.
“With higher taxes and charges and no new money for tourism marketing, Australia is fighting with one hand tied behind its back,” she said.
“Ripping more than half a billion dollars from the visitor economy with a new backpacker tax is simply ridiculous. Taxing working holiday makers from the first dollar they earn, instead of giving them equal treatment with other resident taxpayers, is a backward step and will damage Australia’s international reputation.”
Osmond said TTF had lobbied for an increase in Australia’s marketing funds in real terms as there was fierce global competition for the visitor dollar. She called the increase in visa application fees “an enormous own goal”.
“The tourism industry has argued that it’s vital Australia should be reducing the costs of visas from key markets, like China, to increase our appeal in the face of proactive visa reform by many of our major competitors,” she said.
Treasurer Joe Hockey has warded off criticism saying backpackers had been “enjoying” a tax free threshold of almost $20,000 and the playing field needed to be balanced out.
“We don’t want to increase taxes on Australians, but we do want everyone to pay their fair share along the way,” he said.
Foreign investors will also face an increase in costs with application fees to buy real estate doubling from $5,000 to $10,000, raising $650m over four years.
