Many countries in the world are governed democratically. Democracie are governed by one man one vote rule. The leaders who are voted for become people’s representatives. The elected leaders are the people’s representatives in government. Government operations are funded from the taxes collected by the revenue authority. The government uses taxes to pay salaries, build roads, hospitals, and public schools. This is the genesis of taxes.
What is not known to many is that many foreigners who visit various countries around the world are also sometimes subject to tax. The rationale behind this is that they earn this income in the said foreign countries. Furthermore, they benefit from public utilities which have been provided using public funds. On the basis of this school of thought, Australia introduced a backpacker tax in the year 2017. This tax was basically levied on the foreign laborers in Australia. The revenue authority thus compelled foreign laborers to pay a special category tax for any gainful employment in Australia.
Just as the local income tax is charged on a graduated scale, so is the backpacker tax. Unlike the local income tax, the backpacker does not exempt any income from taxation with the first thirty seven thousands being charged fifteen percent. Amounts higher than thirty seven thousand are charged at a higher rate of the graduated scale rate. This tax is seen to exploit foreigners because they are charged taxes right from the first dollar while the locals are charged at amounts above eighteen thousand and two hundred dollars. The subsequent brackets also show inconsistencies for the backpackers and local income tax. Fortunately, for the foreign workers have found relief after an Australian Federal Court dismissed the backpacker tax levy as illegal.
this is against the spirit of unity among some of the European countries whose citizens are being charged such taxes. In the ruling the court also sited discrimination against the foreign workers. The Australian tax man is considering appealing against this decision since they had targeted to collect over half a billion Australian dollars from the backpacker tax.
Sectors that relied on the supply of foreign laborers are up in arms at this decision which is causing them to have a shortfall of employees. The foreigners who worked in Australian in the periods of 2017 to 2019 are questioning the possibility of applying for a refund of the tax formerly submitted to the revenue authority.