Federal cabinet on Tuesday is due to consider a compromise on the backpacker tax, as the government moves to clear away the issue as soon as possible.
A submission is expected from Treasurer Scott Morrison proposing that backpackers be subject to some tax, but nothing like the flat 32.5% that was originally planned.
Before the election the government deferred for six months the implementation of the tax – which had been announced in the 2015 budget – from July 1, 2016, to January 2017. The delay came after strong opposition to the tax, in particular from farmers looking for seasonal labour. The tax also hits the tourism industry.
When the review was announced it was said the delay alone would cost the budget A$40 million. The tax was originally estimated to yield $540 million over three years. Morrison has said that revenue lost in a revision needs to be offset.
Deputy Prime Minister and Nationals leader Barnaby Joyce, who earlier was expected to be a co-sponsor of the cabinet submission, recently said a resolution of the backpacker tax issue was imminent.
During the election campaign rebel Nationals backbencher George Christensen threatened that if there was not a satisfactory outcome he would quit the Coalition. He has subsequently said his threat was in the context of his being confident of a compromise.
Cabinet on Tuesday is also expected to get an update on the stand-off between the government and opposition over the same-sex marriage plebiscite. This follows Monday’s talks – which yielded nothing – between Attorney-General George Brandis, Special Minister of State Scott Ryan, Shadow Attorney-General Mark Dreyfus and the shadow assistant minister for equality, Terri Butler.
Authors: Michelle Grattan, Professorial Fellow, University of Canberra