THE BACKPACKER TAX

As I wrote in the previous post, the Australian government just passed a “backpacker tax.” What in the world is that you say?

Let’s start with an analysis of basic geography. Looking at a map, it is clear that Australia is not connected to Mexico or anything else for that matter.  The good news is that they do not have to build that wall, nor do they have to try to get Mexico to pay for it.   The bad news is they do not have a source of cheap labor to do the work that they do not want to do. Like pick fruit, or clean hotel rooms, and such.  So, they have a visa system that allows people, mostly young to come here on holiday, work for some time and actually get their visa extended as a result of the work they do.  For instance, a remote hotel that I stayed in in Tasmania last year was staffed almost entirely by nice young French people. They work for some months, get lodging paid and some small amount of wage, and they are allowed to legally and financially extend their trip.

Amazingly, until this week, that income was not taxed! But, now it is.  The bill started at 32% which seemed far too high, but they settled at 15%.  As I understand it, if the people stay long enough they get some of it back, so it really seems reasonable and the young people interviewed were mostly OK with it.