But before it reaches the senate, questions still remain as to whether the government will have the support of Labor to allow the tax legislation to pass through the lower house.

The federal government yesterday announced it would lower the planned 32.5 per cent tax hit on working holiday visa holders to 19 per cent and abolish the $18,500 tax-free threshold.

Senator Jacquie Lambie said she would introduce amendments to the tax proposal, moving that it should be lowered to 10.5 per cent – below New Zealand’s 11.9 per cent tax rate for earnings over $14,000.

“When it comes to competing for vital backpacker farm labour and tourists, New Zealand is one of our biggest and most aggressive competitors,” she said.

“So it makes sense for our government to at least reduce our backpacker tax rate to one that’s competitive.”

Tasmanian Greens Senator Nick McKim said the party would work towards lowering the proposed tax but ideally wanted to see no tax implemented at all.

”Even with the compromise, this remains a strongly anti-Tasmanian tax that will attack not only our tourism sector but our agriculture sector,” he said.

”The government is basically saying to primary producers, ‘here is a scat sandwich but we’re going to tell you it’s an icecream’.”

Lyons Labor MHR Brian Mitchell said the government’s move was better late than never but that it should not have been proposed in the first place.

"I'd prefer to see this mad tax axed but the key priority is to get people on the ground as quickly as possible, and I'll be guided by what local farmers and industry say they need," he said.

Fruit Growers Tasmania, Tasmanian Farmers and Graziers Association and Primary Employers Tasmania each say they are happy with the 19 per cent tax rate.