Tax ups risk for farmers

The owner of one of northern WA's biggest melon farms says a decision to increase the rate of tax paid by backpacker workers could put his business in jeopardy.

Broome businessman David Galwey grows a range of crops, including watermelons, rockmelons and pumpkins, at his Shamrock Gardens farm, about 150km south of the Kimberley town.

Mr Galwey said his horticultural enterprise employs up to 30 backpackers in the peak season because he cannot find Australians willing to carry out the work.

But he now faces a dilemma because the Federal Government plans to scrap the $18,000 tax-free threshold for people on working holiday visas from July this year.

Under the changes, non-residents would be taxed at a rate of 32.5 per cent for every income dollar.

Mr Galwey said the move had potential to have a severe impact on his operation.

"We rely on backpackers all year round because local people will not work 150km south of Broome and Australians won't do the sort of work that we are looking for," he said.

"We have tried to employ Australians - we have tried everything."

Mr Galwey said he had fears that backpackers could turn to other countries that would be more tax lenient.

"There is anecdotal evidence they would go to New Zealand or Canada or other countries apart from Australia if they were forced to pay 32.5 cents in a dollar while working," he said.

Broome Chamber of Commerce and Industry president Rhondda Chappell urged the Government to consider collecting superannuation as a levy instead, which she estimated would generate $540 million and have no adverse effect on workers and industry.

Ms Chappell said abolishing the tax-free threshold would create flow-on effects that would be detrimental to the horticulture industry.

"Australia is competing with countries like Canada which already offers considerably cheaper visas ($150 as opposed to $440), and now we're going to further deter working holidaymakers with this tax," she said.

"What we have suggested to government is collecting the money otherwise given to travellers as superannuation, which is currently released in cash as soon as they depart the country, often used to fund further travels abroad.

Such a levy would offer Government $540 million and save farmers who rely so heavily on these workers."