Dewey charter change to allow lodging tax

A bill to amend Dewey’s charter to allow for collection of a lodging tax has passed each house of the General Assembly and awaits the governor’s signature.

Once signed, the law is set to go into effect on or after April 1, 2021, and will impose an initial tax rate of 1.5 percent for the occupancy of any room in a hotel, motel or tourist home. The tax rate can be increased up to .5 percent annually until it reaches the maximum rate of 3 percent.

Delaware Code defines a tourist home as a place with at least five permanent bedrooms for the use of tourists or transient guests, but which does not have cooking facilities.

Senate Bill 236 also states the new lodging tax is distinct from the existing accommodations tax, and that rental property may be subject to either the accommodations tax or the lodging tax, but not both.

The bill sponsored by Sen. Ernie Lopez, R-Lewes, and Speaker of the House Rep. Pete Schwartzkopf, D-Rehoboth, was unanimously passed by the Senate June 16 and the House June 25. A two-thirds majority vote was required to amend Dewey’s charter.

Dewey commissioners voted June 12 to approve a resolution to submit the proposed reincorporation of the charter to the General Assembly for enactment.

In December, commissioners discussed imposing a 3 percent lodging tax on hotels, motels and tourist homes following Sussex County’s decision to impose a similar tax. At that time, Mayor TJ Redefer said the town’s hotels and motels had a competitive edge over short-term rentals because they were not taxed by the town.

In a June 25 email, Commissioner Gary Persinger, liaison to the charter and code ad hoc committee, said commissioners approved charter changes in June 2019 and directed Town Solicitor Fred Townsend to format the full set of charter changes as a resolution that would be appropriate for submission to the state.

“The lodging tax amendment did not affect the timing of the larger set of amendments, but we did need to ensure that the June 12 set of amendments was fully consistent with the lodging tax amendment,” Persinger said. “The amendments that we approved on June 12 were on our to-do list for some time. There is no specific explanation for the timing. The press of other matters and events simply kept those amendments from getting to the top of the list.”