What are Cambridge's proposed new 'tourist tax' rules and how would they work?

Cambridge tourist tax new rules
Cambridge councillors are considering proposals for a new European-style tourist tax. Credit: PA

A prestigious university city is considering following Manchester by introducing a new £2 per night tourist tax.

The European-style charge was deemed a success after being launched in Manchester last April, so the proposals are now being considered by Cambridge City Council.

It is hoped the tax could achieve “significant investment in the visitor economy in the Greater Cambridge area at a level previously unseen”, according to the council's report.

The Manchester scheme currently charges £1 plus VAT per room per night.

Cambridge could introduce the tax as early as 2025, should the plans progress and a ballot of hoteliers prove successful.

What is Cambridge's proposed tourist tax?

Under the proposals from the city's business improvement district (BID) visitors to hotels in Cambridge that have 10 or more rooms would be charged £2 per room per night.

This would rise to £3 per night from the third year of the scheme.

Major cities in Europe, such as Rome, Paris and Barcelona, all operate similar tourist taxes.

A rateable value threshold would decide which businesses charge the levy, said the BID, and that around 35 hotels and properties with more than 10 rooms had been identified.

Airbnb and self-catering accommodation in Cambridge would be exempt from the tax. Credit: PA

How would the tax help Cambridge?

A report to the council said the tax would benefit Cambridge by raising between £1.5m and £2.6m per year over a five-year business plan, based on an average occupancy rate of between 66% and 76%.

It said that an Accommodation Business Improvement District (ABID) would be created to levy the charge for overnight hotel stays, and that this would be collected by hotels.

Hotels would pass this on to the ABID quarterly in arrears based on an average occupancy rate set by the business plan.

These funds would then be used by ABID to invest in Cambridge's visitor economy.

Who would be exempt from the 'tourist tax'?

AirBnb and self-catering accommodation, which fall outside of the business rate database used under BID legislation, would not have to collect the levy.

Nor would businesses where accommodation is a secondary part of the business – such as pubs with a few rooms.

Some university colleges operate a commercial bed and breakfast offer at some times of the year but cannot be forced to charge a visitor levy as they are educational institutions, the report said.

But the document said a “voluntary agreement is being explored with the relevant colleges to cover the times of the year when they let rooms on a commercial basis”.

When could the tourist tax be introduced?

In order for the ABID to be established, a ballot of the hotels in the Greater Cambridge area is needed, but initial discussions with hoteliers have been "positive", the council said.

Jemma Little, economic development manager at Cambridge City Council, said: “It’s very much decided by the hotels who would be expected to charge the levy and the BID [business improvement district] has timetabled that ballot to take place in July this year.

“They’ve written to the secretary of state to inform him that this will be taking place.”

If proposals are approved, the new ABID could start as soon as 2025.

Labour councillor Cameron Holloway said: “I think it’s a great initiative and one that would be really positive for the city.”

The committee voted unanimously to continue exploring the proposals, moving towards a ballot of hoteliers.

What is the reaction to the proposed tax?

People visiting Cambridge had a mixed reaction to the proposed £2 per night tax when ITV News Anglia asked for their thoughts.

One visitor said she thought the cost of restoration for the old buildings of the city would need extra funds that could come from the tourist tax. She said: "When you have buildings which are nearly 1,000 years old, I think maybe it's not a bad idea."

Some thought the charge was necessary but "maybe not that much, maybe £1?", suggested one.

Some of those working in the city said £2 was unlikely to put off their customers.

Toby Hoten from Byford Art Gallery said: "It's interesting. I could see why people would be happy about it but also can see people getting furious at the idea of [being asked] for more money but they need money. They are underfunded as it is."

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