Cities and towns in Delaware are breathing a sigh of relief with a Chancery Court decision that upholds the ability of Dewey Beach to levy business license fees
A half a dozen businesses owned by Sussex County lawyer and entrepreneur Alexi Pires claimed in the suit that the fees are illegal since they far exceed the cost of administering the tax. Businesses often pay for multiple licenses and fees can add up.
The suit also argued that the town did not hold a referendum to authorize the business license fees that gave the town about $1 million in revenue between 2007 and 2013.
In dismissing the suit, Vice Chancellor Sam Glasscock, III, acknowledged that taxes can be used to drive people out of business, but cited Delaware court decisions that upheld the taxes in Dover and Newark. There was no word on an appeal.
The businesses filing the suit included Jimmy’s Grille of Dewey Beach, LLC, Bottle Taproom, Inc., Coconuts-Waterfront, Inc., Dewey Beach Liquors, Inc., Nobeach, Inc., and Rusty Rudder, LLC
Business licenses are levied by the state and municipalities as a tax on businesses, since they are not tied to regulatory functions. The licenses are an important revenue tool for Delaware municipalities which receive little or no direct aid from the state and rely heavily on property taxes for law enforcement and other costs.
Dewey Beach, just south of Rehoboth Beach, is known for its night spots and party atmosphere in the summer. In the past decade or so, a larger year-around population has demanded changes in what some saw as lax enforcement.
The Town of Dewey Beach won another victory early this year with a State Supreme Court decision that allowed construction at the Ruddertowne site. A hotel opened at the site earlier this year and is expected to aid efforts in making Dewey into more of a year-around destination.
Pires, who owns and has interests in a number of Sussex County businesses, is perhaps best known for running as an independent candidate against U.S. Sen. Tom Carper and for his role in helping to reach a settlement in civil suits filed against Beebe Medical Center (now Beebe Healthcare) by families of sexual abuse victims of Earl Bradley.
Bradley is now in prison for life and the site of his practice near Lewes has been razed. Beebe and physicians were accused of negligence in not reporting suspicions about Bradley’s conduct.
Click here for a copy of Glasscock’s ruling.
