Tuesday, 6 December 2016

The Dumbest Tax Ever


Why the Backpackers Tax is the “Dumbest” Tax Ever in Australia

Backpackers and itinerant workers will now pay 15% on income that they earn in Australia.  It is the dumbest tax I have ever seen to date. It will cement Australia’s place as the #1 country in the world as the most over-taxed, expensive and unattractive place to visit. It is the dumbest tax for the following reasons:

  1.  You want to encourage tourists and itinerant backpackers who are on limited stay visas to come to Australia and be ambassadors when they go home to tell their fellow countrymen on how great Australia is and that they too should visit this great land.  Do not forget that Australia is effectively thousands of miles from anywhere in the middle of the ocean. The Government needs to give every incentive possible to the tourist industry to attract all types of visitors.  By charging backpackers a 15% backpacker’s tax, you are simply going to scare them off and they will travel to other countries.
  2.  The effective rate on backpackers will now be 25% and not 15%.  Don’t forget that this country has a 10% Consumption Tax (GST) which means backpackers will now pay 25% in total tax when they are here
  3.  Our primary producers especially fruit farmers rely heavily on itinerant backpackers during their picking season and by charging a 15% backpacker tax, we are effectively kicking our farmers in the guts.  Lazy Australians simply do not want to do the work and are more than happy to receive the 15% backpacker’s tax as unemployment benefits after a backpacker has already paid it as a tax.  Lazy Australians don’t want to do the work! It’s a fact! Give incentives to overseas backpackers to come to this country and pay $0 tax (yes zero tax, nil nothing, nada).
  4. Let’s face it, whatever backpackers earn in Australia whilst they are here, they spend in Australia whilst they are here.  It goes back into the economy. Unless you are blind, dumb or stupid, every bar, pub, casual eating restaurant, fast-food joint in every regional or costal town is packed with backpackers from Brisbane all the way up to Cook Town.  They spend what they earn on food, drink, accommodation and tourist trips.  You will discourage them from spending this money in Australia and in fact they will spend less here and it will not find its way back into the economy and help economic growth and regional small businesses. 
  5. You are also kicking the tourist operators in the guts.  With a few more dollars in their back pocket, I know as a backpacker myself travelling around Europe, I had more money to spend on sightseeing, day tours, putting money back into the European and UK economies where basically myself and my friend Grant, ate, drank and spent everything that we earn't every week. If you discourage this with a backpacker’s tax then the Australian economy will shrink.

This is once again another nail in the coffin of Australia’s economy.  Australia is only a population of 22 million people.  You need a thriving tourist and primary production industry.  You need people to continuously come to this country and spend their Pounds, Euros, US dollars, or Danish Krone.  We want tourists and backpackers to go back to their country of origin and say:

“Wow Australia is a great place to visit and I earnt money over there and paid zero tax.  It certainly helped me stay longer, spend more and travel further and sightsee a lot more places in that big country!”

Or, under the backpackers tax they will now have the conversation with their friends and families back home that will go like this:

“Geeze, I got slugged a 15% tax in Australia when I was working over there as a backpacker!  I had to come home early because I ran out of money and I didn’t spend as much on what I thought I would.  I only saw half the attractions and travelled less within the country. Don’t go to Australia because it is too expensive and they tax you too much!”


So which country do you want?  One where visitors pour into and spend what they earn here and help bolster and support tourism, the economy and our local farmers?  Or do you want a country where we send a clear message across the world that we just rip people off by ever increasing rates of tax and introduction new ways to rip people off with more tax?

7 comments:

  1. Isn't it also likely to increase the cost of produce to Australian consumers?

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    Replies
    1. Greg, thanks for your feedback. Yes it will by driving up wages.

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  2. How much do other countries charge?

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    Replies
    1. Brenda, thanks for the question. I would prefer to see Australia have a nil tax on these types of tourist/visitors. Not sure how much taxpayers money was used to coax Oprah and her huge entourage here but I can't see any tangible gain from that. So let's not tax people who spend their money here instead of making Australia free for those who have plenty of cash but we just give it away or worse still, pay them appearance money!

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  3. Couldn't agree more. We were having a similar discussion at the dinner table on the weekend. A quick money grab by the Government will end up costing Australian business big time. Very short sighted to say the least!

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    Replies
    1. Thanks Danny. You are spot on. No sense at all.

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