A 'bed tax' on visitors to Scotland's capital could help plug a predicted £10m hole in festivals finances.

The City of Edinburgh Council is in talks with the Scottish Government over obtaining the power to add a charge to hotel prices in the capital to help fund some of the world's premiere cultural events.

Cllr Sandy Howat, deputy leader of the council, said that the levy could be a way the city raises revenue for the 12 festivals.

The council does not have the power to introduce the charge is in discussions with the government over gaining it.

Cllr Howat said that other cities renowned for their culture, such as Barcelona, have used the same charge successfully, and added: "I think it would work here.

"There is a mantra that taxation is wrong, but instead we have to have an argument that is: what is taxation for?

"A bed tax or a 'transient visitor levy' would have a great attraction for me because you are not only taxing tourists, of course, but you are taxing visitors for the retail experience or those coming to make business opportunities."

He said the bed tax would take a "small cut" from money paid by these many visitors to the city and "place it in the council and ring fence it deliberately for specific areas so that businesses can see what they are investing in, and getting in return."

Cities set the levy, generally a percentage on top of the fee for a night's stay, although he said Edinburgh could pursue other models, with different charges for different parts of the years, for example a lower charge for "quieter" months in the city's calendar.

He added: "It's seeing taxation as an investment - look at what you are getting in return."

Faith Liddell, director of Festivals Edinburgh, said that new forms of revenue for the festivals would not come just from a single source, but a bed tax was one idea that has been in place in other cities such as Toronto and Barcelona.

"There is not a single solution and everyone must come together and discuss how we deal with these issues," she said.

"And we have to find a solution that is acceptable to all parties, we do not want to be in conflict with the business community.

"But there will be a funding gap, and it needs to be filled."

The discussion about a bed tax came as a major new report into the next ten years of the festivals was published.

The report, Thundering Hooves 2.0, is a £50,000 report commissioned by the overarching Festivals Forum and produced by Festivals and Events International (FEI) and BOP consulting.

It warns that looming short falls in public funding, named a "fiscal cliff", could see the city "relegated" from the top tier of cultural cities.

It contains 38 recommendations for the festivals and the city, including improved city-wide IT, travel and accommodation measures, a new concert hall, and a 'Memorandum of Understanding' between Edinburgh and Glasgow.

The study, aimed at the next decade, also suggests joint working between festivals.