It is shocking to see the mayor and commissioners of Rehoboth Beach discussing a gigantic tax increase so soon after the election campaign where this proposal was not mentioned at all. The proposal would double the gross receipts tax on homeowners, from 3 to 6 percent. The rental tax is paid by the part-time residents who rent their Rehoboth homes by the week in the summer, and then enjoy using their homes the rest of the year. We rely upon and use the services of local rental agencies like Jack Lingo, who enforce the city rules and collect the rental tax, unlike AirBnB and VRBO.
The commissioners are talking about doubling this tax on homeowners, while at the same time they are discussing major funding for Rehoboth Beach Main Street to subsidize the business community.
Why are the commissioners taxing the homeowners to subsidize businesses? Take a look at the city budget online and see how little revenue is collected from the businesses. Businesses pay no gross receipts tax. They pay a small license fee, usually about $325 per year, and in return the city funds the summer parking for their employees (a far greater value). Even the hotels and motels do not pay any room tax to the city, unlike in Bethany Beach and elsewhere.
If the city needs more revenues, why not start by asking the businesses to pay their fair share? And how about enforcing the rental tax equally? More and more investors are coming to Rehoboth and constructing "mini hotels" in residential neighborhoods not zoned for this commercial activity, which they rent by the night and all year long, through websites like AirBnB and VRBO, instead of supporting the local rental agencies.
How many of these investors are operating "under the table" and without paying for a license, without paying any rental tax, or underreporting their gross receipts?
Why are the commissioners funding the city on the backs of homeowners who are playing by the rules, while giving a free ride to businesses (mostly LLCs) that pay nothing?
The commissioners should be working for the good of the whole city, and not just the businesses that supported their election. Instead of doubling the rental tax on homeowners, the commissioners need to broaden the tax base to include businesses and enforce the taxes on investors.
Gary A. Glass
Rehoboth Beach
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