The recently announced ‘backpacker tax’ for travelers on working holidays in Australia will likely drive many young people away across the Tasman to New Zealand, a tourism leader says.
"I think there’ll be a lot of people in the youth tourism market who are really scratching their head over that one," said Luke Martin chief of the Tasmania tourism industry.
"If you’re backpacking and wanting a working holiday and you’re looking at Australia or New Zealand, right now you look at Australia and you’re going to get taxed 35 cents in the dollar, and in New Zealand you’re going to get taxed zero.’
Currently travellers pay no tax on earnings up to A$18,000 but from next year, a 32.5% tax rate will be payable from the first dollar.
Backpackers and gap year students generally take low paying jobs on farms or in bars and hotels while travelling the country.
The Government says the change will bring in an extra A$540million.
"We don’t want to increase taxes on Australians but we do want everyone to pay their fair share long the way," said treasurer Joe Hockey.
Working holiday visas for Australia are available for travellers under 30 and valid for up to one year.
