Dewey officials consider raising accommodations tax

A vote to approve commissioners’ ability to raise the accommodations tax in Dewey Beach may appear as a ballot item in the September municipal election.

At the Jan. 21 commissioners meeting, Mayor Bill Stevens said the town has capped the tax at 3 percent. The state may possibly implement an 8 percent tax, Stevens said, which would affect rental homes in unincorporated areas; that tax revenue would go to the state. 

Stevens said he would like to give commissioners the ability to raise the tax to 8 percent, stating he believes most residents would rather have the money stay in town than go to the state. Because the tax is capped, a referendum would be required, Stevens said. 

Commissioner Gary Persinger said the state could impose a tax on short-term rentals, which could then be subject to 16 percent tax. He said 8 percent may not be the right number; a lower number would be better. 

Rehoboth’s accommodations tax is 6 percent and Bethany’s is 7 percent, Commissioner David Jasinski noted, and he suggested the public weigh in on the issue via referendum. The change is not an emergency, so the referendum could be held in conjunction with the general election in September.

Commissioner Paul Bauer said he agreed, and the town needs to make a case for raising the tax in order for it to pass.

Town Counsel Fred Townsend recommended commissioners decide as a group what the percentage should be for the proposed referendum. The change would need authorization by the General Assembly, he said.

As outlined in Chapter 167 of town code, Dewey’s accommodations tax of 3 percent is established on the gross proceeds derived from the rental or charges for accommodations. Payment of the tax is the responsibility of the accommodations provider.