Tourist tax worth £1bn a year for culture floated

A tourist levy on overnight accommodation in England could generate more than £1bn a year to support cultural infrastructure and placemaking, according to a new report.

The Cultural Policy Unit think tank recommends adopting a percentage-based levy of 3% to 5% to ensure the system remains “progressive and equitable”, with those staying in higher-end accommodation contributing more.

It also argues that the funding should be ring-fenced to support cultural venues such as theatres, museums and arts centres, as well as cultural assets like festivals and art collections, and creative spaces including studios and workshops.

Outdoor public art, cultural institutions and organisations, and creative districts in cities and towns are also among the suggested beneficiaries.

The think tank notes that more than 40 countries, including Germany, Spain, Canada and France, already have some form of tourist levy.

The report points out that while legislation in England does not currently allow for a tourist tax, Manchester has already introduced a similar levy paid by accommodation via its voluntary business improvement district.

But it says a change to the law “would generate considerably more revenue”, and that its potential to have significant and long-term impact could be far greater”.

The report proposes a “borough-based distribution model”, which would be “driven by metro mayors and combined/local authorities”, to make sure that the financial benefits “feed back to the appropriate areas, projects and institutions”.

While substantial proportions of the revenue from the levy would go to tourist-heavy cities, the think tank also argues that the tax could involve a redistributive element of “perhaps 20 per cent of the overall pot”. This would “help develop new cultural hotspots and support cultural grassroots activity outside main cities and towns”.

As well as institutions such as museums, galleries and theatres, the report says that cultural infrastructure includes “informal spaces like pubs, music venues, and community centres”.

“These spaces are integral to both the social and cultural fabric of a place, providing environments where individuals can connect, share experiences, and help forge a collective identity,” it says.

‘Essential tool’

The report notes that ongoing financial pressures on councils have had impacts including a decline in local cultural offerings and making it harder to maintain sites and venues.

“The tourism charge presents an opportunity to bridge this funding gap by creating a dedicated, ring-fenced revenue stream that could be used to support cultural infrastructure, heritage preservation, creative districts and community-based arts initiatives,” it says.

“Given the financial pressures on local authorities, tourism levies could become an essential tool in ensuring that the UK’s rich cultural heritage and vibrant arts scene continue to thrive, even in the face of austerity and budgetary constraints.”

The Cultural Policy Unit’s Director Alison Cole said such a levy “is routine in so many other countries” and that if England “carefully legislates for its own tourism charge” it could “[plant] the seeds for the growth and regeneration of cities and communities across the country”.

Tristram Hunt, Director of the V&A, described the report as “highly significant and expertly costed”, adding that it “conclusively makes the case for a tourist levy to support art and culture across the country”. 

“The UK is now a global outlier in failing to raise revenue from international visitors – and it is hitting our infrastructure at a time of tight public finances. It is now up to the hotel sector to join the conversation and develop a scheme which works for their members in terms of bureaucracy and overheads,” said Hunt.

Andy Haldane, Chief Executive of the Royal Society of Arts, said that the UK has “systematically under-invested in its rich cultural assets and has stymied its local leaders’ capacity to raise taxes to invest in them”, adding that “legislating for a city tourism tax would solve these problems at a stroke”.