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Xenophon to keep word on backpacker tax

AAP logoAAP 26/11/2016 Andi Yu

Nick Xenophon says he will keep his word to the government to support its backpacker tax bill but it's the moves of other parties that will determine its fate.

"We have given our undertaking to the government," Mr Xenophon told AAP on Saturday.

Mr Xenophon wants the Murry-Darling Basin plan to get sorted, but clarified that this would not effect his support of the tax on foreign fruit pickers.

"Agreements have been made. We won't breach our agreements."

Uncertainty looms large over the backpacker tax as the government, Labor and crossbenchers remain deadlocked, but there are hopes a resolution may be reached as soon as Monday when parliament resumes.

Crossbenchers and the opposition have left the door open for a compromise on the income tax rate foreign fruit pickers pay that could lie somewhere between the 10.5 per cent the Senate wants and the government's plan for 19 per cent.

One Nation, with four votes that could decide the issue, has signalled support for a rate between 12 and 15 per cent.

"I still believe it's not tested and if this fails and it's at too high a rate, the farmers right across Australia will suffer," One Nation leader Pauline Hanson said on Friday.

Senator Hanson said the backpacker tax should start at 10.5 per cent, with the government to review it in a couple of years before looking at upping it to 15 per cent.

Labor leader Bill Shorten, who's previously vowed the issue would be decided by Christmas, said he's also willing to negotiate.

"Labor is prepared to work to fix the problem," he told reporters.

Treasurer Scott Morrison says a reduction to 15 per cent would mean a loss of $120 million in revenue.

Agriculture Minister Barnaby Joyce signalled another move could delay a resolution even further.

"They'll just move again, and move again until the place looks chaotic."

Without an agreement, the government insists a court ruling means all working holiday-makers will pay 32.5 per cent tax from the first dollar they earn after January 1.

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