Coalition agrees to 15% Backpacker Tax

He accused Labor of playing politics and refusing to negotiate after it proposed a tax rate of 10.5 per cent against the government's original proposal of 19 per cent.

The backpacker tax debate has going for 18 months but reached a climax this weekend when Nationals MP Andrew Broad broke ranks and called for a 15% rate.

The additional $120 million cost of the compromise would be dealt with in the mid-year budget update, Mr Morrison said, so that it would "wash its face".

"Most importantly this is a win for farmers, small business and tourism but this is also a win for One Nation and a win for common sense", Hanson said.

The 15 percent rate was a compromise between the 19 percent rate suggested by the government and a 10.5 percent rate by independent senator Jacqui Labie who had the support of other parties, BBC reports.

Mr Morrison put the blame for the farce on Opposition Leader Bill Shorten.

FEDERAL Treasurer Scott Morrison has announced support for a compromised 15 per cent backpacker tax that he's hopeful will pass federal parliament this week during the final sitting week of 2016.

"That means this week, hopefully even today, this matter is resolved", he told reporters.

"With the 95 per cent clawback on superannuation of backpackers, then the effective tax rate is closer to 24 per cent which is... roughly double the tax rate for backpackers in New Zealand".

They feared it would deter tourists from choosing the country as a destination, with some 600,000 backpackers heading to Australia every year, many finding work picking fruit.

It is expected that the compromise will satisfy the crossbench, meaning the bill will pass the Senate before Parliament takes its Christmas break from Thursday.

"The Senate really should not be supporting this proposal on a 15 per cent backpacker rate", Whish-Wilson said on Monday.

NFF CEO Tony Mahar said it had been a painful process but expressed gratitude a 15pc compromise rate had been reached.

"ATEC members, businesses which are at the coalface of the export tourism industry, are telling us they are experiencing a 20-30% decrease in visitation from this market and they are very eager to get Australia back on track".

The story Turnbull government's backpacker tax backdown to cost budget $120m first appeared on The Sydney Morning Herald.

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