Pubs and clubs in the centre of Newcastle will be charged for selling alcohol after midnight from Friday.
The late night levy will see premises charged between £299 and £4,400 a year to sell alcohol until 06:00.
The money raised will be used to tackle alcohol-related crime and disorder, safety schemes and street cleaning.
Traders said while the charge was not welcome they understood the city council faced budget pressures and the money raised would be used positively.
Newcastle City Council said up to 280 of the city's 350 licensed premises would be affected. A board has been set up to supervise how the money will be spent in the city centre.
Among the schemes it could pay for are taxi marshalling, CCTV improvements, street pastors, street cleaning and personal safety initiatives.
'Safest in country'
Councillor Linda Hobson said: "Newcastle's night time economy has a worldwide reputation and makes a significant contribution to the prosperity of the city.
"However, it also has less welcome consequences - noise, crime, anti-social behaviour and negative health impacts.
"The levy will ensure that businesses which benefit from the late night economy make a limited contribution to these costs, which will help the city remain as one of the safest in the country and attractive to investors and visitors."
The amount of the levy will depend on the rateable value of the premises. There will also be a best practice scheme under which if businesses sign up and meet standards they will receive a 30% discount.
Newcastle City Pubwatch chairman Damian Conway said businesses did not want to pay the levy but understood why it was being introduced and were pleased with the way the council had worked with them on the scheme.
He said he was aware of a number of premises which had opted not to open after midnight and they would monitor the situation to check it was not putting businesses under too much strain.
He said: "We don't want to pay a tax. But we are going to have to pay it and understand why we are paying it but we can do very little.
"But something positive should come from what started off as a tax."