Fruit prices to spike if backpacker tax deal not reached

Australians will have to pay more for their fruit if the government does not reach a decision on what rate to tax backpackers, according to a leading Queensland fruit grower.

Before 2015, backpackers effectively paid no tax. Then the budget introduced a tax rate of 32.5 per cent.

The rate was then lowered to 19 per cent.

Backpackers fill the majority of fruit picker jobs in Australia. Image: Getty

Now the government cannot decide on a permanent rate, with the Senate suggesting 10.5 per cent.

Labor Party leader Bill Shorten said he plans to negotiate the rate further.

"Of course we will talk to the government, but it's the government who's created a shortage of labour in the farms," Mr Shorten said.

Backpackers feel they are being hit hard with the current rate of tax. Image: Yahoo!7

If a deal is not reached in parliament's final week, the rate will revert to 32.5 per cent.

One Queensland mango farmer said if the rate stays the same, it will inevitably force fresh food prices to rise.

"Eventually it will pass onto the consumer because there will be less product available," farmer Joe Moro said.

The rate is causing a major debate in parliament. Image: Yahoo!7

Agriculture Minister Barnaby Joyce agrees with Mr Moro.

“They have got to let through the 19 per cent rate," he said.

But his National's colleague, Senator John Williams disagrees, saying 10.5 per cent would be the "lesser evil".

However, One Nation leader Pauline Hanson said a 15 per cent compromise would do the trick.

"Look I think 15 per cent is the maximum limit," she said.

Although, that's news to her colleague Rod Culleton, who said: "our position is to keep it as it is and keep it all moving".