The backpacker tax backhand; tourism industry furious at holiday tax hike

I was hoping for a happy World Tourism Day yesterday, instead the Federal Government decided to mark the global celebration of the tourism industry with a massive slap in the face by announcing that it will increase the ‘holiday tax’ – the Passenger Movement Charge – by a whopping 9 per cent from 1 July 2017. This decision, done without any consultation or warning is simply unacceptable to the industry.

TTF, representing the industry, has been steadfast in our opposition to any increase in the Passenger Movement Charge. Before the Federal Election, the first plank of our election manifesto was the demand that all sides of politics continue to freeze the PMC at the current rate of $55. We’ve long argued, and will continue to argue, that the only direction that the Government’s holiday tax should be heading is one direction – down.

As you have seen in many issues of Circular and in the media, TTF has been a vocal advocate of the need for the Federal Government to rethink the backpacker tax. The revised package announced by Treasurer Scott Morrison was a step in the right direction to reducing the sledgehammer effect the backpacker tax was having on the number of working holiday makers choosing to visit Australia. The latest numbers from the Department of Immigration and Border Protection, also released yesterday, show that the number of working holiday visas has dropped a further 5.4 per cent in 2015-16.

I must acknowledge that the Government has picked up some of TTF’s suggestions to reform working holiday maker visas. The extension of the age limit for working holiday makers from 30 to 35 and the reduction of the cost of working holiday visa by $50 to $390 is welcome. The relaxation of some of the employment restrictions that will now allow backpackers to continue to work for the same employer for 12 months but in different states or territories in Australia is also positive. The allocation of $10 million for the industry to work with Tourism Australia to increase the working holiday makers to Australia following the more than 43,000 decline we’ve experienced over the past three years is something that TTF has been calling for as part of this review.

But all these positive moves to take the sting out of the backpacker tax have been overshadowed by the blatant cash grab by the Government through the hiking of the holiday tax. Industry is furious and that is the message I have been relaying in countless media interviews and our media statement over the past 24 hours. TTF engaged in the discussions on the backpacker tax in good faith to work with the Government to achieve its goal while protecting the backpacker market. At no point was increasing the PMC raised as a possibility by anyone – industry or Government.

I know that Treasurer Morrison has inherited this debacle from his predecessor and that it has been a difficult issue for Government. However, any need to make revenue targets has been set by the Government not industry and now we are being shaken down to make this foolhardy backpacker tax add up. I say enough is enough. We will not be the Government’s cash-cow.