“Caravan Tax” article published in Western Morning News April 2012

Posted on: 26th April 2012

Why do I think that static holiday caravans should not be subject to a 20% VAT burden which purchasers of touring caravans are obliged to pay? The Government describes the current situation as an “anomaly”. That is why it is proposing to apply VAT to static as well as touring caravans.

But I have a problem with this proposal. Wherever a line is drawn an “anomaly” is usually created. The Government isn’t resolving an anomaly, merely shifting it and creating a new one. It is no surprise that, in these straightened times, a Government tends to iron out anomalies by increasing rather than decreasing the scope of taxation and hence revenue to the Treasury!

The new “anomaly” created by Government is that it will impose a 20% burden on the purchase of static caravans that are used as holiday homes, whereas it applies no taxation on the purchase of static bricks and mortar holiday homes. The impact of this is that static holiday caravans which can only be occupied for a part rather than the whole of the year – i.e. for holiday use – will be discouraged. Therefore those people seeking to purchase a property for their regular holiday use may, as an alternative, purchase from the finite supply of houses and cottages, thus denying their availability to local families in housing need and adding to the inflationary impact this would have on the housing market, thus pricing properties out of the reach of local people.

Static holiday caravan sites are an ideal solution to managing the demand for a permanent location for those regular visitors who wish to have a stake in our area, without denying a local family a home. The last Conservative Government introduced a very significant tax rebate for second home owners which had the opposite effect – a 50% council tax reduction which cost the taxpayer hundreds of millions of pounds and which helped better off people with their second homes when there were thousands of local families who couldn’t afford their first. The Government should be doing the opposite to what it is proposing to do with static holiday caravans.

Apart from that, the static holiday caravan market is a very important sector of the tourism industry in Cornwall. It brings an estimated £104 million each year into the local economy and accounts for 506,000 annual staying trips (figures supplied by Visit Cornwall). Expenditure by domestic and overseas visitors to Cornwall is in excess of £1.6 billion and tourism is estimated to support over 40,000 full time equivalent jobs of which 26,000 are in business directly serving visitors.

The fear in the tourism trade is that, if implemented, these changes will have a detrimental impact on the number of visitors and on employment both in holiday parks and many businesses which are indirectly supported by tourism spend such as local cafes, pubs, restaurants, visitor attractions and shops. Research for the British Holiday and Home Parks Association predicts that the tax will lead to one job loss for every 15 holiday park pitches left vacant.

This week we asked the Government to review its position. Apart from proposing to extend the consultation time on the proposals by a further two weeks, the Government has not indicated that it is prepared to rethink.

It is for that reason that I supported a proposed amendment which sought to delete the Government plan to increase VAT on static holiday caravan purchases and ended up voted against the Government when they refused to budge.