James Pearson, CEO of the Australian Chamber of Commerce and Industry, said: "The Tax Office on Wednesday released a clarification of tax arrangements for working holiday makers, but its claim is not supported by existing publicly available figures.
"It would be concerning if the Government was seeking to use this inconsistent data to make the case that backpackers will face a reduced, rather than increased, tax burden with the introduction of the backpacker tax. It would also be concerning if the Government's original decision to bring in a 32.5 per cent tax rate was introduced by default.
"It is misleading to claim that the latest backpacker tax proposal amounts to a reduction in tax for most backpackers, given the evidence shows otherwise.
"The publicly available figures indicate that the vast majority of people on working holiday maker visas are treated as residents for tax purposes, and therefore get the tax-free threshold.
"The 2013-14 income tax statistics show that there were just 11,500 non-resident taxpayers aged between 18 and 30. That is just 4.8 per cent of the number of people who had working holiday maker visas in that year. Unless the Tax Office has more recent figures showing a massive change, it is hard to see how it argues that ‘most' working holiday makers are non-residents.
"It is clear that without any legislative change most working holiday makers could be deemed to be non-resident for tax purposes, thus implementing the Government's 2015 Budget measure. The Tax Office's statement may increase the risk to the tourism and agriculture sectors, which rely on the inflow of backpackers.
"The current intense debate is made more difficult because neither the Treasury nor the Tax Office have calculated how much will be raised by the backpacker tax, as they admitted to a Senate inquiry last week.
"Australian Chamber – Tourism has presented revenue estimates that show the Government's assumptions massively underestimate the revenue it will collect from the proposed 19 per cent backpacker tax.
"Our estimates, prepared by Lateral Economics, make clear the government will exceed its revenue target and so does not need to proceed with its proposed 9 per cent increase in the ticket tax. The $5 increase the Passenger Movement Change will apply to every person departing Australia, including Australians heading overseas. If the revenue is not needed, why risk a tax increase that could inhibit tourism?
"We urge the Senate to carefully consider the evidence presented to the inquiry about the impact of both the backpacker tax and the ticket tax."
