Legislators introduce bill to add vacation rentals to lodging tax

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A bill has been introduced to extend the state’s lodging tax to include vacation rentals.

The measure has sponsors and co-sponsors from both parties, led by State Sens. Gary Simpson, R-Milford and Deborah Hudson, R-Greenville.

A story from Radio station Delaware 105.9 stated that the measure could raise between $8 million and $11 million a year. Proceeds from the tax go to tourism promotion efforts as well as the general fund.

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The vacation rental industryhas traditionally been handled by real estate brokers hired by landlords at the Delaware Beach.

However, the business has changed with the advent of Airbnb, which offers hotel-like reservations that can be handled by the landlord. Real estate companies are now rolling out their own apps in response.

There have also been concerns that the apps makes it easier to operate larger illegal lodging establishments that do not have to met health and safety standards of B&Bs and hotels.

“Broadening the base of who pays into the Lodging Tax makes sense as long as the pre-established allocation percentage from this tax continues to be reinvested in the tourism marketing effort,” said Hilton Wilmington-Christiana General Manager Brad Wenger. “There is a long-standing, proven ROI from the funds spent on tourism marketing in the state of Delaware.”

William Sullivan, managing director of the Courtyard by Marriott, Newark University of Delaware, said the tax is a ”fairness issue and will help fund tourism, beaches and the general fund.”

Sullivan noted that the legislation has the support of the Delaware Hotel and Lodging Association.

Some states and nations are now taxing the online transactions, which can be easily added into the total lodging cost. In Delaware, Dewey Beach and Rehoboth Beach already chargea rental tax.

The measure is likely to face opposition from the Coastal Delawarereal estate industry and perhaps municipalities that levy their own tax.

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