Canberra lowers backpacker tax rate after rural opposition

Australia watered down plans for a "backpacker tax" on foreigners on working holidays on Tuesday, after an outcry from farmers and tourism operators.

Canberra had been under increasing pressure to shelve the tax - 32.5 cents for every dollar earned - amid fears it would deter tourists from choosing the country as a destination.

Some 600,000 backpackers travel to Australia every year, many of them finding work picking fruit, and farmers had complained bitterly that the tax could affect labour supply at harvest time.