Delaware Beach Towns Worried About Proposed Lodging Tax - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Delaware Beach Towns Worried About Proposed Lodging Tax

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FENWICK ISLAND, Del. - Proposed legislation could make staying at a bed and breakfast or renting a vacation home more expensive in Delaware.

House Bill 130 calls for amending the state's lodging tax code to include short-term rentals.  That would mean bed and breakfasts, vacation rentals and campgrounds would all be required to charge an occupancy tax much like that charged by hotels and motels in the state.

In Fenwick Island, the proposal has generated widespread opposition.  Property manager John Kleinstuber says raising the lodging tax will force renters to make tough decisions about when or if to make a reservation in Delaware.

"You'll have people who used to come down for two weeks, will maybe come down for one week or maybe they won't even come every year, maybe every other year," said Kleinstuber.

The state's eight percent occupancy tax would be on top of the 7.5 percent local lodging tax already applied in Fenwick Island.  Town manager Terry Tieman fears such a steep increase could make Delaware properties less attractive than properties in Maryland or New Jersey.

"Our council is concerned and Fenwick Island is concerned that this will affect tourism which is the second largest industry in the state of Delaware bringing in about $4 billion a year," said Tieman.

One legislative analyst's estimate suggests Delaware could bring in up to $11 million annually from the new tax.

According to the bill's authors, five percent of the proceeds from the tax would go to the State General Fund, one percent to beach preservation and DNREC, one percent to each county's convention and visitors bureau, and one percent to the Delaware Tourism Office.

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