A bill that will allow New Castle County to levy a room tax on hotel rooms is on its way to the governor.
House Bill 377 was passed by lopsided margins in both the Senate and House and came about with New Castle County facing a budget deficit that is expected to require a double-digit increase in property taxes.
The New Castle County Council and County Executive have battled over the property tax increase but were on the same page with the room tax increase.
The bill permits a County government to impose and collect a lodging tax of no more than 3 percent on hotel, motel, and tourist home rooms located in the unincorporated areas of the county. The city of Wilmington already imposes a two percent tax.
The 3 percent is in addition to the current 8 percent state tax. However, unlike the state tax, all proceeds from the 3 percent levy would go directly to the county.
The state tax goes to state coffers, with a portion also used in tourism promotion efforts and beach replenishment.
The lodging industry was unable to convince legislators that the tax would be harmful to a growing industry that is seeing new hotel rooms pop up in Wilmington, which already has a two percent tax.
Many areas within the region have lodging taxes that are within the range of combined state and local hotel taxes proposed by New Castle County.
However, critics warned that travel hubs, such as Philadephia and Baltimore, which have far more attractions for tourists and convention-goers, would benefit from northern Delaware being less competitive.
Hoteliers also face criticism from patrons when they see the tax on their bills, given the state’s aggressive promotion of its sales tax-free status.
Click here for details on the votes and bill.
