Edinburgh’s council leader has called for a new visitor levy to be introduced urgently to help the city fund its festivals, including this weekend’s loss-making Hogmanay street parties. Cammy Day, leader of Edinburgh’s Labour administration, said the proposed visitor levy could help the city raise about £25m in extra funding for services and to subsidise tourism infrastructure. The Scottish parliament is studying plans to empower councils to introduce the UK’s first transient visitor levy, a daily surcharge put on hotel and guesthouse beds very similar to tourism taxes in other European cities. Successive council leaders in Edinburgh have been the most vociferous campaigners for the new powers, arguing that a levy would help the city cope with the 4 million tourists who now visit each year. The council has faced fresh pressure from the organisers of this weekend’s four-day Hogmanay festival – who predict they will lose £500,000 staging it – to increase its subsidies. All its events on New Year’s Day are free. The levy had been resisted by the city’s hoteliers, who argued it would put off tourists at a time of rapidly rising costs. Its supporters counter that the hotel groups which dominate the sector make significant profits in Edinburgh; the city has very high bed-occupancy rates and seasonal prices. Day said he welcomed recent calls from a cross-party committee of MSPs for ministers to rethink their original proposals for an 18-month delay between a city setting up a levy and it coming into force in 2026. But he was disappointed that the committee, in a report published just before Christmas, had not made a final decision on whether the levy should be a flat-rate or a percentage tax on beds per night. Day said he preferred a percentage rate of perhaps 3-4%. A flat rate levy would be regressive since it meant someone staying in a luxury hotel would pay the same rate as someone in a low-cost hostel. He admitted there were also significant demands for the levy to be spent on other public services. Most residents do not benefit from the festivals economy but experience much higher accommodation costs because tourism greatly distorts the property market. Day said the proposed legislation, expected to be passed by Holyrood in 2024, stipulated that any levy had to help support tourism infrastructure. But it could also be spent on improving parks or streets that would be used for festivals. “I say the whole city should benefit. The tax for me is to grow and promote responsible tourism but also to benefit the city,” he said. “There’s a lobby of people who think the 18-month time period is way too excessive: we’re ready to go now.” The festival, now in its 30th year and famous for its midnight fireworks display and open air concert on New Year’s Eve, to be headlined this year by Pulp, has previously been sponsored by brands such as Johnnie Walker whisky. Bill Burdett-Coutts, one of its organisers, said the Covid crisis and general economic situation had meant commercial sponsors were hard to find, while the event’s costs had grown by 20-25%, making the need for public sector support even more pressing, he said. “We know the council is cash-strapped, so I understand their position completely,” he added. “I certainly think a tourist tax is a good idea, and if used wisely would be a good thing.”