Good afternoon,
We are beginning to see a debate in Dover over the lodging tax that should have occurred at Legislative Hall.
Over the past year the General Assembly signed off on giving counties and municipalities the power to levy a three percent lodging tax, with the option of pocketing the whole amount.
The state lodging tax is used for the state’s general fund as well as tourism promotion and beach replenishment.
New Castle County and a number of municipalities have adopted the tax, often with little thought of the economic consequences.
In the case of Kent County and Dover, both entities were given the power to levy a maximum 3 percent tax. (The New Castle County tax is limited to unincorporated areas).
In Kent, plans call for the funds to be earmarked for the DETurf athletic field complex south of Dover. Allocating the tax to one entity raised a lot of eyebrows in Kent County and elsewhere.
Here’s another problem. The Kent County tax would also include Dover, the home of most of the county’s hotels. Dover is also looking at its own room tax.
The result could be a hefty and perhaps unbearable total lodging tax of 14 percent in Dover – the state’s 8 percent state tax, with a 3 percent DETurf tax and a 3 percent city tax.
That number is high, especially in a city that has seen little or no growth in the number of rooms. Its largest hotel, Dover Downs, faces stiff competition from other gaming venues.
No action has yet been taken by either the county’s Levy Court or Dover City Council.
The Delaware State News reported the Dover council will take another look at the issue later this month.
So far, the public does not appear to be buying the argument that the tax is not a big deal, since it will be paid by people outside the county. Even an 11 percent tax will squeeze margins for hotel owners in a county without Sussex’s beaches or New Castle’s corporate travelers.
Expect some give and take from the county and city in coming up with a more palatable tax figure. Enjoy the weekend and today’s autumn-like weather.
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