County considers a 3 percent lodging tax

A public hearing will be held next month to accept public comment on a proposed Sussex County Council ordinance allowing implementation of a lodging tax of up to 3 percent in unincorporated areas of the county.

Last summer, a bill was passed in the Delaware General Assembly to allow Sussex County to impose the tax. The state currently has an 8 percent lodging tax.

The county ordinance was drafted, then introduced, by Councilman Irwin G. “I.G.” Burton at the council’s Oct. 22 meeting. If passed, the tax would be on hotels, motels, bed-and-breakfasts and other lodging accommodations with five or more bedrooms, and it would generate more than $1.3 million for the County.

The tax would affect about 40 existing lodgings or tourist homes and go into effect in January 2020. A tourist home owner is anyone who operates a structure where tourists or guests sleep, but doesn’t include short-term rentals or Airbnb’s.

Other state bills passed this year authorized towns including Millville, Georgetown, Rehoboth Beach, Seaford, Dover and Delaware City to impose the same tax. On June 11, the Town of Millville passed a resolution to impose the tax on hotels, motels and bed-and-breakfasts, but at this time, the town doesn’t have any of those types of accommodations.

Ocean View Mayor Walter Curran this week said he had asked Town Manager Carol Houck to place the matter on the Nov. 12 town council meeting agenda, for discussion.

“It probably won’t mean much to us right now, because hotels aren’t allowed in Ocean View. There may be a bed-and-breakfast in town, but as for hotels — we don’t allow them. Many years ago, it was decided … because of the high traffic in a residential area,” he said.

Houck said the lodging tax “needs to be explored by the town to determine interest.”

More than a year ago, enabling state legislation also allowed New Castle County to enact a lodging tax.

“With legislators’ support, both Sussex and Kent counties were successful in having the General Assembly pass enabling legislation for the remaining two counties this year,” County Administrator Todd Lawson told council members at the Oct. 22 meeting, directing their attention to a copy of House Bill No. 228. It was sponsored by state officials including Sen. Gerald Hocker and Speaker of the House Pete Schwartzkopf.

“The legislation that passed in the General Assembly was not broad in that we could collect the tax and spend it on anything,” Lawson told council members, explaining that the revenue would have to be used for capital and operating costs in seven categories — beach nourishment, waterway dredging, economic development, tourism, recreational activities, water quality and flood control. Sussex County would be permitted to use up to 5 percent of the revenue from the tax for administration costs.

Lawson said the objective is to find a funding source — in this case, tourists and visitors — for improvements “to the very things that are directly affected by the guests to our region.”

County staff has been working on preparation for passage of the ordinance, Lawson said, explaining that vouchers will be collected.

“We are developing a portal on our website where people would submit a voucher and payment monthly. Staff has also been in contact in discussions with the State … because they are undergoing an upgrade to their software for the state collection of taxes.

“In that first cycle of upgrades, the accommodation tax the State collects currently is going to receive a software upgrade. Therefore, it is our hope that the State will couple this lodging tax, and the other two counties’ lodging taxes, with that collections process. In the future, it will be all done electronically — and not be a voucher,” Lawson said.


By Susan Canfora
Staff Reporter