LEWES, Del. — The city of Lewes is considering raising the tax on short-term rentals from 5 percent to 5.5 percent, a move that has some property owners concerned about its potential impact on tourism.
While the increase is just half a percentage point, rental owner Bill Froh with Mimi's House believes it could discourage visitors.
"It's counterproductive overall," said Froh.
He added that renters, who already contribute to the local economy, would ultimately bear the burden of the tax hike.
"The people who come to rent tend to spend money in the community. They go to restaurants, parks and other attractions," said Froh. "So they're actually bringing in more money by staying. This increase could discourage those visitors."
The city defines short-term rentals as any stay of 30 days or less. The proposed tax hike would come in addition to the state's 4.5 percent tax on short-term rentals, which took effect Jan. 1.
Sharon Palmer-Stauffer with RE/MAX Realty Group said the combined taxes could push renters to consider other destinations.
"When one town loses a guest, we pretty much all lose," Palmer-Stauffer said. "It hits us all."
The city discussed keeping the long-term rental tax rate at 5 percent.
