WAFarmers urges members and the greater agricultural and tourism sectors to have their say on the recent developments with the backpacker tax issue.
Since the announcement of the proposed backpacker tax in the 2015-16 Federal Budget, WAFarmers has campaign extensively, alongside other industry representative bodies, to reduce the tax from 32.5 per cent to a more reasonable figure. This has included numerous submissions from both a WAFarmers and a Western Australian whole-of-industry approach, representation at a Federal round-table workshop in Sydney, and continuous petitioning.
With only two sitting weeks left for 2016, this is a time sensitive issue that, at this stage, looks likely to result in a stalemate which would mean the original tax of 32.5 per cent is implemented in January.
What’s happened recently
The Federal Budget in April was a sore point for industry, with no confirmation that the proposed tax of 32.5 per cent and the removal of the tax free threshold would be altered. However, mid-May saw the Federal Government announce a delay to the implementation of the proposed backpacker tax, from 1 July 2016 to 1 January 2017, subject to a multi-department Federal review to be led by Minister for Agriculture Barnaby Joyce.
Following the review, the Federal Government bowed to pressure from industry in September and dropped its proposed 32.5 per cent backpacker tax plan to 19 per cent, from 1 January 2017. This was along with other changes affecting aspects including the Working Holiday Visa application fee and age eligibility.
In October, two weeks after the Federal Government announced their intention to drop the proposed tax rate of 32.5 per cent to 19 per cent, the Australian Labor Party called for an inquiry and report by the Senate Economics Legislation Committee, a move which was condemned by WAFarmers and the wider agricultural and tourism sectors.
Economics Legislation Committee findings
Last week, the Economics Legislation Committee tabled their report to the Senate in Canberra. The report accepted the proposed 19 per cent tax rate and urged the Bills to be passed with urgency, however it was not debated in the Senate. Parliament is currently in recess for one week and will sit again next week for a two week period, after which there are no more sittings until next year.
At the same time, Independent Tasmanian Senator Jacqui Lambie moved to amend the proposal to 10.5 per cent, a move that was supported by Pauline Hanson’s One Nation party.
Where to from here
WAFarmers is of the opinion that a 10.5 per cent tax rate would be a disincentive to employ local content in favour of foreign workers, as it is less that what Australian employees are taxed.
While a 19 per cent tax rate has been determined by industry as an acceptable compromise that would see profitable returns without crippling the agriculture and tourism industries, an alternative solution would be to employ a 15 per cent tax rate. Not only is this amount within the range originally identified by industry as an acceptable minimum for a tax rate, but it is the same amount that workers on the Seasonal Workers Program are taxed. This would see a uniform tax rate applied to all overseas labour, whether on the Seasonal Workers Program or on a Working Holiday Visa.
What does this all mean?
If the Bills are not passed by the end of the sitting weeks left for 2016 – at any of the proposed reduced tax rates – then the proposed 32.5 per cent tax rate will come into play as of 1 January 2017. The only remaining hope for this situation would be that the Federal Government once again announces a delay to the implementation of the tax, but this would be unlikely.
What you need to do
The National Farmers’ Federation will gather some farmers to attend Parliament in Canberra on Monday, 21 November to give a grassroots message directly to the politicians. For Western Australians affected by the backpacker tax, we urge you to ring Senator Rod Culleton’s office along with other Federal MPs to convey the urgency required surrounding this issue.
We hope that by hearing real stories from real producers/industry, together we may be able to sway the debate and put an end to these 18 months of madness.
Senator Rod Culleton
Telephone: (08) 9226 1750
Tollfree: 1300 512 510