Businesses in the Northern Territory are struggling due to a 30 per cent drop in occupancy rates with some forced to close down, according to a report on NT News.

Alice Springs’ Toddy’s Backpackers is closing its doors due to the steady fall in backpacker numbers over this year. A report by the Australian Hotels Associations (AHA) said hospitality traders in Darwin were down 20 to 30 per cent on the previous year.

The AHA says things are set to get much worse from July 1, 2016 when working holiday visa holders will lose the tax-free threshold of $18,000 and be required to pay 32.5 per cent tax from the first dollar earned.

The report states that budget travellers are already turning their sights to New Zealand and Canada, which have cheaper visas with less stringent requirements. A Working Holiday Maker visa in Australia is $440 compared with $150 in Canada.

The NT Government now has joined calls to the Federal Government to simplify the visa applications and assessment process and reform the WHM visa by reducing fees, reviewing the tax-free threshold and increasing the age limit.

In a report tabled to Parliament, Chief Minister Adam Giles said the dwindling number of backpackers was “one of the biggest issues facing the Northern Territory”.

“I would suggest the cost increase in the WHM fee has definitely had an impact on Australia’s competitive positioning as a destination of choice for Working Holiday Makers. It is astounding that while competitor destinations such as Canada are reducing the cost of the WHM visa fees – Australia is increasing the costs to come here under the guise of ‘cost recovery’.” NT Chief Minister Adam Giles.