Working holiday tax rate backflip

TREASURER Scott Morrison has described a backbench committee as being like “a pig in mud” after settling on a compromise for its controversial backpacker tax.

Farmers have also been quick to back the deal in which backpackers will be taxed 19 cents from the first dollar they earn from the start of next year.

The Government under former prime minister Tony Abbott had originally planned to make people on working holiday visas pay 32.5 cents in the dollar, rather than enjoying a tax-free status.

Earnings above $37,000 will be taxed at the same marginal tax rates as everyone else.

“When you do the work and you consult properly, you come to the right outcome,” Mr Morrison said yesterday.

Backpackers are a vital supply of workers for the agricultural sector, with as much as a quarter of the industry’s workforce in Australia on a working holiday visa.

The Treasurer insists the changes will put working holiday makers in Australia on the same footing as if they were in Canada, New Zealand and the UK.

Nationals leader Barnaby Joyce said the compromise was a win for farmers. The National Farmers Federation said the agricultural community had feared its temporary workforce would be decimated by a clear disincentive for backpackers to come to Australia.

“The NFF has always advocated for a rate of 19 per cent as a fair and reasonable measure,” president Brent Finlay said.

Opposition Leader Bill Shorten described the tax as a “mess from day one” and its botched handling typical of the Turnbull Government.

Mr Shorten would not commit to backing any of the proposed measures in the package, even though Labor banked the revenue from the initial proposal in its election costings.