Cornwall Council is calling for a council tax crackdown on second homes and a new tourist levy in a fight against out-of-towners.
The local authority is preparing to ask the Government for new powers to apply a 300pc council tax surcharge on second homes, introduce up to a £3 tourist tax, and close a business rate relief loophole increasingly being used by second home owners to avoid higher council tax charges.
In a whitepaper published this week, Cornwall Council said with the help of the Government it could raise an “extra £2bn” in tax revenues each year. It said the money raised would be used to address the county’s “housing crisis, a super-ageing and inverted population profile, some of the lowest household incomes in Europe, weak infrastructure and an economy that remains too reliant on tourism and hospitality”.
The council says that “the prevalence of second and holiday homes” is having “negative effects” on its housing market.
Councillors in the popular holiday destination also plan to ask for “flexibility” to introduce rent caps, and for “a share of more buoyant tax streams” – such as VAT, stamp duty land tax, corporation tax or income tax.
A final version of the whitepaper will be presented to Westminster in September, according to the council’s website.
Cornwall and other local authorities are already planning to make use of fresh powers that have been in place since April that allow for the doubling of council tax on second homes.
This is despite concerns some people are falling foul of the rules, after moving home or moving out a tenant and then struggling to sell their properties on the market.
Last year, the Labour government in Wales gave Welsh councils powers to triple council tax bills for second homeowners.
Cornish councillors will say if its powers were brought in line with those of Wales, it could raise an extra £78m.
The local authority will also ask for powers to consider and consult on new levies, including a “visitor levy”. It said it could raise between £20m and £63m, depending on whether the flat fee per night was £1 or £3.
Earlier this year, Manchester said its new tourist tax raised £2.8m – based on a £1 per room, per night charge. The city introduced it in April 2023.
The council also wants to clamp down on a tax loophole that allows some second homeowners to escape existing council tax surcharges by registering their homes as businesses.
This means, those that let out their second homes in England for at least 70 days of the year, while continuing to advertise it for 140 days, can avoid council tax and pay business rates instead. As a small business, they are then able to claim 100pc relief on any business rate tax due.
Councillors have said some £20m of government funding is being granted through tax relief to short term holiday rentals in Cornwall such as Airbnb.
It said it will therefore call for new powers to be able to throw out applications for rate relief schemes as it sees fit. Currently, applications for rate relief schemes are reviewed by the Government and not at a local level.
A Ministry of Housing, Communities and Local Government spokesman said: “This government is committed to giving powers back to communities, and the Deputy Prime Minister has already outlined steps to kickstart a devolution revolution across the country.
“We will publish a revised framework setting out the powers and funding on offer to areas with devolution agreements in place in due course.”
Cornwall Council was approached for comment.
2024-07-26T16:59:52Z dg43tfdfdgfd