The Australian Government has said that it will publish legislation to further lower the proposed backpacker tax rate to 15 percent.

  Treasurer Scott Morrison made the announcement during a press conference on November 28. It followed weeks of negotiations with independent senators and attempts by the Labor Party to cut the rate from 19 percent to 10.5 percent.

  Last week, Morrison dismissed calls for a compromise on a 15 percent rate, warning that a reduction of four percentage points would cost AUD120m (USD89.7m) over four years.

  Under the Government's proposals, most working holiday makers will be treated as non-residents for tax purposes, preventing them from accessing the AUD18,200 tax-free threshold. The Government had originally intended to introduce a 32.5 percent rate from July 2016, but later reduced this to 19 percent and pushed the implementation date to January 1, 2017.

  On November 24, the Senate voted in favor of an amendment to lower the rate to 10.5 percent, but the Senate's amendment was subsequently rejected by the House of Representatives. The Government had said that if the legislation was not passed before the Christmas break, the rate would revert to 32.5 percent from January 1. Non-residents are charged income tax at 32.5 percent on every dollar earned.

  Morrison said that the compromise reached with independent senators, including Nick Xenophon, will allow the Government to move forward with its plans. However, he added that "the Parliament will now have a AUD120m bill to deal with as a result of making this change."

  Morrison explained that the Government will announce how it intends to plug the AUD120m hole as part of the Mid-Year Economic and Fiscal Outlook (MYEFO) on December 19.

  News of the compromise was welcomed by the Australian Chamber – Tourism. CEO James Pearson said the 15 percent rate was more internationally competitive than the 32.5 percent rate originally proposed and will mean that Australia remains able "to attract the backpacker labor it needs to pick fruit come harvest time and service cafes, restaurants, and accommodation."

  The Labor Party on the other hand described the announcement as "the latest humiliating back down in what has been a rolling crisis for the Abbott/Turnbull Government."

  Shadow Treasurer Chris Bowen said: "The backpacker tax has been ill-conceived, ill-thought out, based on no consultation, and the Government has lurched from position to position in a way which has undermined confidence in regional Australia, which has affected backpacker numbers to Australia even already, even before the tax has come into place."

  Bowen stressed that the Labor Party "will maintain its position on a 10.5 percent preferred tax rate."