Australia’s divisive proposal for a so-called backpacker tax has been suspended until next year, following months of criticism, which has now become an election issue in rural areas.
The government has deferred its implementation until the beginning of 2017 pending a review.
It was due to begin in July with working holidaymakers facing a 32.5% tax rate on every dollar earned.
Farming communities that rely on seasonal labour and tourism leaders have voiced strong opposition to the tax in recent months.
Nearly 50,000 people called for its scrapping in an online petition.
Assistant Treasurer Kelly O’Dwyer said it would be shelved until January 1, 2017 pending a ministerial review.
"We are absolutely committed to making sure that this is very, very much right for our rural and regional communities, for our tourism sector and for Australia as a whole," O’Dwyer said.
"The concept of taxing working holidaymakers at 32.5% on every single dollar they earn is foolhardy when they have the entire world as a destination to travel to and spend their money in," Tourism and Transport Forum chief executive Margy Osmond said.
Northern Territory Farmers chief executive Shenal Basnayake said when the tax rate is eventually implemented, many rural businesses would be forced to shut down if travellers stopped coming on working holidays.
Working travellers make up as much as 85% of the agricultural workforce in the Northern Territory.
The postponing has been described as a cynical election ploy by political rivals such as the Greens and should be dumped permanently.
