While most are lauding Joe Hockey’s budget as a victory for small business, the Tourism & Transport Forum (TTF), the industry’s peak body, has come out swinging, claiming the sector will be hit with “at least $600 million in new taxes and charges”.
CEO Margy Osmond says forcing backpackers to pay 32.5% tax on every dollar they earn will actually rake in more money for Treasury than the much-vaunted ‘Google tax’, rip millions of dollars in discretionary spending from the tourism economy and damage Australia’s international reputation.
As part of the Budget measures revealed on Tuesday night, working holidaymakers will lose their tax-free threshold, netting the government an additional $540 million over four years.
“Ripping more than half a billion dollars from the visitor economy with a new ‘backpacker tax’ is simply ridiculous,” Osmond said.
The working holiday visa application fee also jumps $20 to $440, tipping another $5 million into the coffers and the government is also hoping get another $5 million from the burgeoning Chinese tourism market with visa applications rising $5 to $135.
“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 10th consecutive increase in their application fees, this new tax on working holiday makers will make them think twice about coming here,” Osmond said.
She welcomed the introduction of new measures to protect international marketing spends from currency fluctuations, but was disappointed there was no increase in marketing funding in real terms, despite the fact that the “passenger movement charge”, the $55 tax on foreigners leaving Australia, will generate $1 billion in 2015-16.
“With higher taxes and charges and no new money for tourism marketing, Australia is fighting with one hand tied behind its back,” Osmond said.
“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.
“If this trend continues, Australia will be overtaken by countries hungry to support their tourism industries.”
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