Introducing a tourism tax would revolutionise our crumbling cultural landscape

Independent

10-03-2025

I've lost count of the government meetings I've attended framed by the health warning: 'Sorry – there's no money.'
This is the refrain that greets beleaguered arts and cultural organisations up and down the country. While the odd, welcome dollop of cash has sometimes been found in a Department for Digital, Culture, Media and Sport (DCMS) budget, or the now-defunct Levelling-Up Fund, our cultural infrastructure is crumbling.
Former Bank of England chief economist Andy Haldane points to a 'systematic underinvestment' in our rich cultural assets over many years, and a country that has 'stymied its local leaders' capacity to raise taxes to invest in them'.
This has not just manifested itself in a horrendous backlog of repairs and a dearth of creative opportunities: civic museums, playhouses and libraries are closing, and informal spaces like pub theatres and grassroots music venues are disappearing completely. All of these make up the unique social and cultural fabric of places and communities.
At the same time, Britain's arts, culture, history and heritage support a multi-million-pound tourism industry – worth about £1.6 billion a year, according to the latest Visit Britain figures.
London alone provides the greatest concentration of artistic and creative endeavour in the world, with museums and galleries (national museums are free), libraries, theatres, heritage sites and concert halls being the top reasons why overseas visitors flock here. Other major cities across the nation, like Manchester, Liverpool and Edinburgh, are also hives of cultural and creative industries, and bustling tourist hotspots. So, when the government says, 'no more money' and asks for 'any ideas for new funding models?', I believe there is a potential answer.
My think tank, the Cultural Policy Unit, has recently published a report proposing a modest 'City Tourism Charge', a mandatory scheme along the lines of the hotel levies that operate in so many other countries across the world.
For the most part, this levy involves a small daily sum – a few pounds, for example – added to hotel or guesthouse bills. You may well notice this 'local tax' when you come to settle up, but it's unlikely to have stopped you from booking in the first place. We suggest that the charge is both modest and 'progressive', so that, on a sliding scale, higher-end accommodation charges more. So, for instance, a three per cent levy on an £840 double room at London's Claridge's would cost an extra £25.20 a night, while a standard double room at Euston's Premier Inn (approximately £120) would cost £3.60.
A vital part of our proposal is that the funds generated be 'ring-fenced for cultural infrastructure and placemaking'.
Put simply, this embraces everything from major heritage sites to cultural festivals, film production hubs to makerspaces and artist studios, and grassroots venues to the creative districts that so many visitors enjoy.
It's important that the funds raised are reinvested back in the cultural and tourism sectors that generate them, creating a self-sustaining 'circular' model. And to make sure this levy benefits every part of the country – not just London – we recommend that the money is distributed locally, overseen by metro mayors, and that a portion of it is redistributed regionally.
It is essential, both for the hospitality sector and the cultural sector, that the result is transformational, particularly because the tourist economy is currently facing increased taxes.
Drawing on costings by the Institute for Fiscal Studies, and most recently the Northern Powerhouse Partnership, we calculate that a three per cent 'city charge' on visitors' hotel bills would generate over £1 billion a year. To put this into perspective, the sums raised could be well over twice as much as Arts Council England has available to invest in its portfolio of organisations.
Hoteliers may not like everything about this proposal – and there are legitimate concerns. But I hope our report will help navigate some of the thorny issues.
Firstly, we are recommending a mandatory rather than a voluntary charge, which reduces the administrative burden on accommodation providers.
Secondly, the charge should be modest and designed in collaboration with the hospitality sector, so as not to discourage visitors.
Thirdly, all the funds generated must be 'additional' – not hijacked to make up for shortfalls elsewhere.
And finally, transparency about how the money is spent is key.
A recent survey, for instance, in the Puglia region of Italy, found that visitors were happy to pay more if the money raised was used to protect and enhance the region's natural environment. Our USP is our vibrant cultural landscape.
What depresses people most is when taxes or levies are swallowed by Treasury coffers. This 'charge' must make a tangible difference to visitors and residents alike.
At present, England is something of a global outlier in not introducing a mandatory tourist charge; even Scotland and Wales are well down the track of legislating for hotel levies (Scotland's scheme kicks off in 2026).
So, let's work together with hotels and the wider hospitality sector to show that we not only cherish our reputation as the cultural powerhouse of the world, but also, through instituting a 'city tourism charge'', that we mean business.