Tax hit on tourism

The budget has hit tourism with at least $600 million in new taxes and charges, but makes no new investment in marketing funding, said peak industry body, the Tourism & Transport Forum (TTF).

Working holiday makers, one of our highest spending categories of visitor, will no longer be treated as residents for tax purposes, removing their eligibility for the tax-free threshold and forcing them to pay tax from the first dollar they earn. This measure will rake in more than $540 million over four years – more than the government’s new ‘Google tax’.

All visitors applying for a visa offshore will also be slugged additional costs for their application charges, with the government raising $437.1 million over four years. Visitors from China will see their application fees increase from $130 to $135, with that market alone footing a $5 million bill, while working holiday makers will be paying an additional $5 million as their application fees increase from $420 to $440.

While we welcome the fact that the government has introduced measures to ensure that the overseas purchasing power of Tourism Australia’s marketing spend is protected from currency fluctuations, we are disappointed that the government has ignored industry calls to increase marketing funding in real terms.

“With higher taxes and charges and no new money for tourism marketing, Australia is fighting with one hand tied behind its back,” said Chief Executive Officer, Margy Osmond.

“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.

“Australia has long been a favourite destination for young people from around the world who live, work and travel here for up to two years, and who spend on average more than $13,000 during their stay. Coupled with the tenth consecutive increase in their application fees, this new tax on working holiday makers will make them think twice about coming here.

“Increasing visitor visa application charges is sending Australia in the wrong direction. With fierce global competition for the visitor dollar, jacking up the cost of visa applications is an enormous own goal. The tourism industry has argued that its 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.