Backpackers working in Australia say they are unlikely to travel as far or stay as long after the Federal Government announced it would axe their tax-free earning threshold of nearly $20,000.

From July 2016, anyone on a working holiday visa will have to pay 32.5 cents in tax for every dollar of income up to $80,000.

Currently, a working holiday maker can be treated as a resident for tax purposes if they are in the country for more than six months.

The change, designed to level the playing field, could reap the Government $540 million over the next four years.

In Tasmania alone, about 50,000 backpackers visit each year.

Tourism Industry Council of Tasmania chief Luke Martin said imposing taxes on working tourists would drive them to New Zealand.

"I think there'll be a lot of people in the youth tourism market who are really scratching their head over that one," he said.

"If you're backpacking and wanting a working holiday and you're looking at Australia or New Zealand, right now you look at Australia [and] you're going to get taxed 35 cents in the dollar, and in New Zealand you're going to get taxed zero."

English backpacker James Webdale has been working and holidaying in Australia for seven months.

In that time, he has been employed on a horse farm in Victoria, as a tour guide at Byron Bay in northern New South Wales and he is currently working in accommodation on the Gold Coast.

The 25-year-old said the change would have an impact on people with lower-skilled jobs.

English backpacker James Webdale said the tax will eat into his already low wage. ( ABC News: Tom Forbes )

"Travellers are pretty pressed for money as it is, so it is going to be tough going for them, and like me, I'm going to be earning less," Mr Webdale said.

"It is quite difficult to find work anyway so in the time period that you find work it is going to be really difficult to save enough to be able to travel around Australia."

Amy Cox, from Nottingham in England, agreed.

"It will stop us from travelling as far because we rely on that [tax-free money] to move us around," she said.

The 23-year-old arrived in Australia last October and had worked at a vineyard near Perth and a tree nursery near the Western Australia town of Donnybrook.

Amy Cox, from Nottingham in England, relies on the tax-free money to travel. ( ABC News: Tom Forbes )

Currently living in a Gold Coast hostel, Ms Cox said she understood why the Treasurer made the decision, even though it would hurt people like her.

"If you work, you have to pay taxes, that's how I've been brought up," she said.

Lisa Lucke is a backpacker from Holland who was also staying on the Gold Coast.

The 18-year-old has been in Australia for five months and has worked as a nanny and on a horse property.

She said it was hard enough travelling without the added tax increase.

Lisa Lucke, a backpacker from Holland, said the cost of living was already expensive, without the added tax. ( ABC News: Tom Forbes )

"Everything is so expensive, everything costs so much money, it's ridiculous," she said.

"I think it's not a good thing actually I think it's bad for ... [the Federal Government] as well because backpackers are like the main thing here in Australia, so it's not good."

Central Queensland pineapple grower Peter Sherriff said there would be less incentive for backpackers to work on his farm.

Backpackers are often the only workers he can find and help him plant and harvest 1.2 million plants each year.

Taiwanese national and pineapple farm worker Ryan Hsu is now has a permanent resident. ( ABC News: Tom Forbes )

The grower from Yeppoon, near Rockhampton, is worried the change will shrink his labour pool.

"It's not the most glamorous work that's going. It's out in the sun and pretty hard going so you haven't got a real wide range to choose from to do that sort of job," Mr Sherriff said.

Taiwanese national Ryan Hsu came to Australia on a working visa seven years ago.

Now a permanent resident, he believed people would still come to Australia on a working holiday, like he did, because they would want to explore.

But he also thought the Federal Government's decision would impact on overseas workers.

"But it's the Government's rules so you cannot do anything about it," Mr Hsu said.