Capital's marketing chief backs call for 'tourism levy' to fund festivals

He said that the "status quo is untenable", the day after Julia Amour, the new director of Festivals Edinburgh, called for a public debate on a new tax or levy in the wake of a report warning of a looming "fiscal cliff" which endangers the continued success of the festivals.

Ms Amour said it was "reasonable to expect" the many businesses that benefit from the annual festivals to contribute towards them through a levy - likely a bed tax on hotel room charges.

Councillor Richard Lewis, culture convenor for the council, also said he supports a targeted levy to specifically support cultural activities in the city.

However, the Scottish Government is not backing plans for a specific city tax to fund the festivals, and has "no plans" for a levy, a spokeswoman said.

Mr Donnelly said: "Against a backdrop of ongoing substantial public funding cuts, limited private sector support and increased competition from other city destinations, a new funding structure is now critical and the status quo is untenable.

"Potential options such as a Transient Visitor Levy, or possible tax raising powers under discussion with the ongoing City Region Deal negotiations, must not be dismissed before they are fully examined.

"The merits and disadvantages of every option available to the city must be considered, leading to a clear, balanced and thoughtful debate within the industry.

"We need everything on the table. Only then can we agree the best route forward for to secure the city’s future success as a leading global destination."

Culture Secretary Fiona Hyslop said recently it was "up to those who have proposed that to argue the case for it."

She said she would pay close attention to the issue but neither expressed enthusiasm for the idea back nor dismissed it.

A spokesman for VisitScotland, the tourism agency, said: "Value for money is a key consideration for prospective visitors to Scotland.

"There are concerns that a tourism tax could hinder our tourism growth and damage one of this country’s most successful areas of economic activity.

"However, if a tourism tax were to be introduced in Edinburgh, VisitScotland would argue that the revenue raised should be reinvested in tourism, events and festivals."

A spokeswoman for the Edinburgh International Festival, said: "In light of the pressure on public sector budgets in Edinburgh and across Scotland, it is important to explore with partners new ways of maintaining the quality and appeal of the city’s festivals and cultural attractions, which make such a major contribution to the business success and world wide reputation of Scotland’s capital city."

The 'fiscal cliff,' estimated to represent a £10 million shortfall in coming years, is the phrase coined in the Thundering Hooves 2.0 report to describe the effect of declining public support for the dozen Edinburgh festivals.

"It's very clear that the public funding rounds are going to be very tight," Ms Amour said.

"I think the festivals have responded brilliantly – earned income has gone up by a third in the last five years, but it is really important to understand what economies might look like, that's why the Thundering Hooves report calls for a wider debate on alternative sources of income."

Ms Amour said: "If people think that the festivals can make the difference up through sponsorship, that isn't very realistic.

She added: "There needs to be a very realistic public debate about if Edinburgh wants this jewel in its crown, if Scotland wants this jewel in its crown, we do need to find a sustainable mix of funding sources.

"There are lots of different solutions."

It has previously been estimated that Edinburgh City Council could raise up to £10m a year by charging between £1 and £2 per hotel room each night.

Berlin has a city tax, as does Barcelona, Paris, Rome, Bruges, and Dubai and other cities.

Hamburg has a tourism tax on a sliding scale which, perhaps as in Edinburgh's case, is ringfenced for cultural funding.

Other cities have a VAT system.

A spokesman for the Edinburgh Hotels Association said: "As the only tourism segment singled out in the proposed Tourism/Bed Tax, Edinburgh’s hotels would resist any plans to impose this additional cost on their guests, especially while other forms of accommodation, restaurants, attractions and retailers, also closely linked to tourism, would not be included."

Ms Amour added: "Some cities have a margin on rates, others have a city VAT, Montreal has local VAT.

"We know there are a lot of people that have interest in how this complex system would work, and some of them are concerned about the possible negative impact on visitor growth.

"We would like to be part of an open debate on might the impact be, and what the different options are. There is a solution out there."