A taxing situation for Kent County hotels

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Good afternoon everyone,

New Castle County and some municipalities were quick to levy a 3 percent local lodging tax. Now, a nonprofit athletic complex wants in on the action.

The Delaware General Assembly, with little or no input from those affected, signed off on legislation that would allow Kent County to levy up to a  three percent room tax.  DETurf, a nonprofit athletic field complex near Frederica, wants the entire proceeds.

To the north in Dover,  officials are making noises about adding their own room tax that could tack on another three percent to hotel bills.

The combined taxes add up to a  14 percent charge to hotel bills. The remaining eight percent comes from a state tax that is allocated to tourism promotion, beach replenishment, and the state budget.

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As of this writing, nothing has been finalized.

Dover is free to enact a  three percent room tax that was authorized for municipalities and New Castle County.

Unlike the Kent legislation, New Castle County’s three percent room tax only applies to unincorporated areas.

One danger is that a sky-high tax would discourage new hotel construction and renovations in Dover.  The added tax could also hamper hotel deals for traveling teams headed to  DETurf, formally known as the Kent County Regional Sports Complex.

Dover and Kent County are already dealing with tourism headwinds, due to new casinos elsewhere in the region that have hurt the county’s two gaming spots. This is in addition to a long-running attendance slump for the two NASCAR weekends.

As for  June’s  Firefly Festival, the event has a limited impact on hotel rooms, since organizers offer  “glamping”  luxury camping options and ups and downs in attendance.

Backers of DETurf cite the economic development potential of the complex. DETurf has been able to attract regional and even one national soccer tournament but claims it needs the money to lure other events on the East Coast and nationwide.

Prospects of sending room tax revenue to one athletic complex have set off lots of red flags. The case could be made for other athletic complexes around the state to receive similar treatment.

The   General Assembly has handed Kent County and Dover a dilemma that the two units of government will have to sort out.  Otherwise, Kent County hotel patrons will be paying big city-sized room taxes.

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