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Newark and New Castle County hope for lodging taxes

Proposed legislation allowing Delaware counties with a population of over 500,000 to collect a lodging tax of up to three percent was joined this week by a bill seeking to let municipalities do the same.

 

New Castle County is currently the only county populous enough to levy the tax, if the bill passes. 

 

The City of Newark was behind the drafting of the bill applying to municipalities, according to acting City Manager Tom Coleman. And Newark City Council is calling a special meeting Monday to consider a resolution supporting it.  

Newark has been looking for ways to impose a lodging tax for a while, according to Coleman. He says the city of 33,000 residents has over 1,000 hotel rooms.

“When they get full they place a pretty big burden on our infrastructure—roads, traffic, police, paramedic services,” Coleman said. “They receive all these benefits but aside from the property tax of the hotel itself they’re not necessarily contributing.”

The bills’ maximum municipal or county taxes of three percent would be top of the state’s pre-existing eight percent lodging tax.

Bill Sullivan, board member of the Delaware Hotel Lodging Association, has told Delaware Public Media he thinks a combined 11 percent tax is high enough to threaten the competitiveness of Delaware hotels.  

But this doesn’t worry Coleman, who says the University of Delaware and Fair Hill horse track and stables drive a healthy demand for lodging in the city. According to him, there are several hotel development proposals underway in the city now.

“There’s a lot of rooms already, there likely will be even more in the future,” he said.

He also notes Wilmington already has a municipal lodging tax, and that nearby counties in Pennsylvania have lodging taxes of up to 12 percent

Critics of the bills have also noted that while a higher lodging tax would affect hotel, motel and many traditional bed and breakfast customers, it wouldn't affect most AirBnB lodgers. That’s because the state code defines a “tourist home” as a place with at least five permanent bedrooms for the use of customers.

The Delaware Hotel Lodging Association’s Sullivan thinks this gives AirBnB an unfair advantage.

The bill allowing counties with more than 500,000 inhabitants to add a lodging tax is scheduled to be considered by House lawmakers Tuesday, and the bill for municipalities could be on the House floor late next week.

This article has been edited. 

 

Sophia Schmidt is a Delaware native. She comes to Delaware Public Media from NPR’s Weekend Edition in Washington, DC, where she produced arts, politics, science and culture interviews. She previously wrote about education and environment for The Berkshire Eagle in Pittsfield, MA. She graduated from Williams College, where she studied environmental policy and biology, and covered environmental events and local renewable energy for the college paper.
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