After political and travel industry pressure, the Australian government has backed down on its divisive plan to tax working holidaymakers 32.5%.
The so-called ‘backpacker tax’ will now be set at 19% of all earnings from January 1, 2017.
After a backlash from rural businesses that rely on transient labour and the tourism industry, the government announced a review of the working visa tax in May.
It also gave a further concession by reducing the cost of a working visa by A$50 to A$390.
Tourism & Transport Forum Australia still maintains its stance that it should be scrapped altogether.
"The message has gone out across the world over social media from backpackers already in Australia – ‘Do not come to Australia because you are about to be slapped with a massive new tax on your working holiday’," said CEO of TTF, Margy Osmond.
"We have now arrived at a package of measures which does protect the integrity of the budget and does address the concerns," said treasurer Scott Morrison.
Working travellers are only taxed on earnings above A$18,200 under current rules.
The Youth Hostels Association recently said the backpacker market generates about A$3.5 billion a year, much of it in rural economies where they live and work.
