Setting the record straight in Dewey

March 21, 2013

In the March 15 edition of the Cape Gazette two letters to the editor were published that created two strawmen leaving impressions regarding the Town of Dewey Beach that need correction.

First, Dale Cooke states in his letter that, “state law does not allow any town to simply raise license fees to cover budget shortfalls.”  The goal of Dewey’s  Budget And Finance Committee in recommending that the town impose a reasonable gross receipts license fee on in-town retail businesses is to achieve long-term financial sustainability for the town, and to achieve that goal in such a way that the benefits and costs of supplying town services are borne fairly among the major stakeholders in town.

The committee has been given the legal advice that license fees can be raised aslong as the town can attribute the increases  as being needed to pay for town services and operations that are directly and indirectly attributed to the presence of the affected businesses in town.  Certainly, the demonstration of the attribution can be legally challenged, but  Mr. Cooke’s statement is incorrect and misleading in creating the impression that the committee’s actions are illegal.

Second, both Dale Cooke and Graham Smith in their letters attempt to distinguish the impact of a gross receipts license fee from that of the town’s accommodations tax in the sense that the renting party and not the owner of the rental property is responsible for paying the accommodations tax, but somehow not the patron but the business owner would have pay the gross receipts fee.

With regards to the accommodations tax, the town code Section 167-16(A) settles the matter with the language, “payment of the tax shall be the responsibility of the provider of the accommodations.” The rental property business clearly has the choice to pay the tax out of its existing profits or to raise the rent and pass the cost on to the renter.

For some not obvious reason both Messrs. Cooke and Smith don’t seem to understand the legal and economic conditions for the accommodations tax and a gross receipts fee are the same.  This is confirmed by the fact that the towns of Rehoboth Beach, Fenwick Island and Bethany Beach all call their equivalents of accommodations taxes as gross receipts assessments.

These two gentlemen can oppose the proposed gross receipts license fees for in-town retail businesses as they see fit, but I do not believe their position will be persuasive to the people in Dewey Beach if they rely upon such sophistry and self-contradictory arguments as the one they have conjured up to distinguish between the impacts of levies on gross receipts on business owners who rent property and those who sell goods and services. Both have to make the decision whether to pay what is due out of their existing profits or to pass on the cost to the customer through a price increase.

Courtney Riordan
chairman, Dewey Beach Budget & Finance Committee

  • A letter to the editor expresses a reader's opinion and, as such, is not reflective of the editorial opinions of this newspaper.

    To submit a letter to the editor for publishing, send an email to Letters must be signed and include a telephone number for verification. Please keep letters to 650 words or fewer.  We reserve the right to edit for content and length.

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