At this week’s Arts Vote debate, the leading mayoral candidates, in a rare display of consensus, all agreed that the arts were crucial to Toronto’s future health. Whether for their own sake or as an enhancement to other parts of the city’s economy, the cultural industries — which add $9 billion a year to the city’s GDP — are helping to position Toronto as a global creative hub, the candidates stated.

Indeed, according to the 2011 Creative Capital Initiative report, Toronto has 66 per cent more artists than any other Canadian city. The cultural workforce stands at about 130,000 people, accounting for 5 per cent of all jobs.

The candidates also agreed on the need to nudge Toronto’s arts spending up to the elusive $25-per-capita threshold. Still well below cities like New York, San Francisco and Montreal, the $25 plateau would nonetheless be an achievement.

So here’s the question no one wanted to tackle: if there’s such a self-evident connection between the arts and Toronto’s economic well-being, why doesn’t the city spend far more on this sector? After all, the Creative Capital report estimated that every dollar of city funding generates $5 in private sector contributions and more than $7 in revenues from ticket sales, program fees, rentals, etc.

With those kinds of returns on investment, in fact, city officials would be foolish to balk at calls for more arts spending. And yet, Toronto’s funding levels stagnated for years until council agreed to dedicate a portion of the billboard tax to the arts budget.

The answer to this seeming paradox may lie in the way we tax. The city depends heavily on property taxes but has no access to the sort of revenues that derive from the economic activity generated by the arts. As a result, the city sees no direct return on its investment.

Many other cities have solved this dilemma with hotel, convention or hospitality taxes, which acknowledge the link between cultural activity and tourism. Tens of thousands of visitors each year come to Toronto for the film and music festivals, the arts companies and the cultural scene. Tourists and business travellers will visit the Distillery District, Queen West and the new Aga Khan museum.

During the Arts Vote debate, the candidates also talked about the importance of establishing a destination music festival here, modelled on those in Austin, Texas.

Despite its location in one of the most conservative American states, Austin officials understand the feedback loop connecting arts-generated tourism and municipal revenues. Austin City Limits, SXSW and other music and sports events draw millions of visitors. To capture some of the dollars flowing into the city, Austin levies a 9-per-cent hotel and venue tax, as well as a sales tax.

Has that tax put a drag on tourism? According to Austin’s 2013 annual financial statements, “Hotel occupancy is strong with 2013 city-wide … As a result, hotel/motel tax revenues continue to grow and in 2013 were 20 per cent greater than the previous year. High occupancy rates have also spurred construction of new hotels in Austin.”

In San Francisco, the city’s hotel tax, introduced in the early 1960s at 6 per cent, now stands at 14 per cent. Last year, it brought in $273 million (U.S.), up 13 per cent from the previous fiscal year. (AirBnB operators recently agreed to collect the dues.)

New York City, meanwhile, imposes three visitors’ taxes, including a 5 per cent hotel levy. As with other cities, those taxes add expense for travellers. But they don’t dent tourism volumes.

Nor, significantly, are they politically radioactive. As The New York Times recently observed, “Raising hotel taxes is often an easy way to increase revenue for the city because most of the money comes from visitors, not constituents. The city’s hotel operators have argued that they are overtaxed … But there is not a lot of sympathy for that argument in the council because the city has continued to draw more and more visitors.”

Yet in Toronto, Queen’s Park has swatted aside suggestions that Toronto be allowed to impose a hotel tax. Instead, the Greater Toronto hotel sector moved to add a modest 3 per cent destination marketing fee to room charges. But those revenues go right back into Tourism Toronto’s promotional activities; they do nothing to bolster arts programs that apparently play a crucial role in drawing visitors.

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The glaring policy disconnect is both clear and costly; indeed, the next mayor should make it a priority to sit down with Premier Kathleen Wynne’s government and sort out a nonsensical impasse. For politicians who profess to love the arts and all that they bring, it shouldn’t take much imagination to come up with a solution.