BY CHRISTOPHER HARRIS
The removal of the tax-free threshold for working holiday visas in the federal budget has Bondi backpackers fired up and local businesses bracing for economic loss.
From July next year, backpackers will be taxed at 32.5 per cent from the first dollar they earn in the country, despite citizens and permanent residents enjoying a tax-free threshold of $19,000.
Youth Hostels Australia CEO Julian Ledger warned that the removal of the threshold is going to reduce overall spending, remove the incentive for people to work, and exacerbate the black economy.
“If you’re earning $21 an hour, paying seven dollars in tax, that only leaves $14 to pay for accommodation,” he told City Hub.
“It’s a general principle, but it would be nice if visitors would be treated on the same basis as citizens and get the same benefit of the tax-free threshold.”
“It will have the effect of driving cash payments, and that means people getting paid under the counter and not being covered by workers compensation.”
Hugo Brunet arrived in Bondi 18 months ago and said his minimum wage of $21 an hour as a waiter seemed high compared to Europe.
He has since fallen in love with the country and opened his own café in Potts Point.
When asked what he spent the majority of his money on, his answer was unequivocal.
“Food and alcohol and going out, I would always be at Ravesis, The Bondi Hotel, The Beach Club, Icebergs, or North Bondi RSL.”
Data from Destination NSW reveals backpackers spent a combined total of $962 million in the state last year.
There are seven budget youth hostels as well as a plethora of private accommodation in Bondi and surrounding suburbs aimed at working holiday makers.
Frenchman Valentine Traule is just one backpacker who arrived in Bondi this year on a working holiday visa, and although the new laws will probably not affect him, he sees the proposed tax as a double standard.
“I feel like this completely unfair. If you accept these people in your country, you have to treat these people like Australians. I don’t like having privileges for one person and not for another; I think everyone should be the same,” he told City Hub.
“If they don’t get their tax back and they earn even less money, their wage is going to end up being ridiculous.”
Lucia Bonizatto has worked at Peter Pan Travel Agency in Bondi for the last three years and said backpackers spend most of their money in Bondi pubs.
“Bondi is kind of like a bubble, you live in Bondi, you drink in Bondi, you stay in Bondi.”
But she doesn’t believe federal taxation change will be the end of the Bondi backpacker community.
“If you’re a backpacker you actually work a lot when you work. But it’s kind of a good lifestyle, Australia is a good country, it’s nice to be a backpacker.”
The budget measures are expected to raise $500 million.