The proposed 32.5 per cent tax rate for foreigners employed in Australia on working holiday visas was due to come into effect on July 1 and would have coincided with the removal of the tax free threshold for backpackers.
However, Tourism Minister Richard Colbeck will embark on a further consultation process in relation to the proposed tax to ensure Australia maintains its global competitiveness as a backpacker destination.
Mr Wilson, a member of the rural policy committee that recently met with the Prime Minister to raise concerns about the tax, said he was pleased with the decision to hold further discussions and prepare a revenue-neutral proposal.
“There was no question the proposed tax would have diminished the availability of labour in the agricultural sector and affected farmers who rely on tourists during busy times of the year,” he said.
“Both tourism and agriculture are vital economic drivers in my electorate and I have been working hard to highlight the important role tourists on working visas have here in O’Connor.
“I’m keen to see the Government implement a policy that ensures we have a fair and balanced approach when it comes to taxing foreigners on working holiday visas.”
Australia is facing a shortage of 127,000 workers in the tourism sector over the next five years and while 90 per cent of the workforce is Australian, the industry relies on overseas workers to make up the numbers.
Mr Colbeck will engage in a whole-of-government process as part of the review, consulting a range of portfolios before presenting the review to Treasurer Scott Morrison.
Mr Wilson said alternative options to the proposed tax could involve a review of laws requiring employers to pay superannuation for backpackers on working holiday visas.
“Currently, employers pay a flat 10 per cent superannuation rate for tourists working in Australia,” he said.
“That money can subsequently be spent once a person on a working holiday visa leaves the country, which is of no benefit to taxpayers.
“The Government could consider removing this requirement and increasing the gross wages for tourists to compensate for changes to the tax rate for those on working holiday visas.”