Tourism industry blasts Government’s backpacker tax black hole

The Tourism & Transport Forum Australia (TTF) has slammed the Federal Government’s economic modelling that the backpacker tax would generate a $540 million windfall over three years in the industry response to the Working Holiday Maker Visa Review.

TTF debunks the Government’s absurd assumption that the backpacker tax will have no impact on the number of working holiday makers choosing to visit Australia. Instead, supported by quantitative survey evidence of travel intentions from real backpackers, it will likely result in a 60 per cent reduction in the number of working holiday makers visiting Australia.

Based on this drop in working holiday makers, the TTF analysis shows that the backpacker tax would raise as little as $82.2 million per year or $264.4 million over three years – less than half of what the Government’s budget papers claim.

Potential impact on Federal Government revenue projections by Backpacker Tax

Period Treasury projection TTF calculation based upon survey results
1H 2017 $100m $100m
2017-18 $220m $82.2 m*
2018-19 $220m $82.2 m*

*based on 60 per cent decline in WHMs plus 2.75 per cent wage increase

“The Federal Government’s bean counters would have you believe that they can slap a 32.5 per cent on every single dollar a working holiday maker earns in Australia and it will have absolutely no impact on the number of people applying for a working holiday visa. That is rubbish!” said Margy Osmond, TTF CEO.

“The Government thought it had a guaranteed windfall when it cooked up the ‘backpacker tax’, instead they are going to end up with nothing but ‘fool’s gold’.

“The problem for the Government is that the backpacker tax is just not adding up. It’s going to end up costing more in the lost opportunities as we drive thousands of working holiday makers to spend their money in more tax-friendly countries like New Zealand rather than Australia.

“As Malcolm Turnbull has said, “If you want less of something, tax it more”, and that is exactly what the Federal Government is going to get if it proceeds with this ridiculous backpacker tax.

“The backpacker tax has been a fiasco from the first word. It’s already damaging our international reputation with working holiday makers without raising a single dollar.

“The best thing the Federal Government can do is announce an immediate scrapping of its plans to introduce this ill-considered backpacker tax and work with the industry to repair the damage it has already done to the working holiday market by funding a major promotional campaign.”