Bill aims to tax Airbnbs, VRBOs

Supporters of a bill that would tax short-term rentals similar to hotels say it would bring more money to the area for beach replenishment and marketing.

“It’s not a new tax, it’s basically redefining what a lodging property is in the State of Delaware,” said Scott Thomas, executive director of Southern Delaware Tourism. “It’s including short-term rentals in an existing tax.”

Currently, Delaware visitors who stay in a hotel with six or more sleeping rooms are charged an 8% Public Accommodations Tax, while those who stay in an Airbnb or VRBO are not. 

Thomas said the state is losing out on about $30 million, of which $3.4 million could have been reinvested through Southern Delaware Tourism and other Sussex County chambers of commerce. Another $3.8 million could have gone for beach replenishment, Thomas said, an issue beach towns are wrestling with today.

Thomas said the 8% accommodations tax would be passed through to the renter, with the owner paying $25 for a licensing fee.

Part of the bill’s opposition has been over the bulk of the tax going into the state’s general fund that then could be spent upstate or on projects outside the beach communities.

Still, Thomas said beach tourism remains a top economic driver, and money from the tax would make an impact.

“With this proposal, it would inject a lot more money into that,” he said. “It would up our marketing to keep up pace with surrounding areas.”

Thomas said Maryland’s tourism taxes bring more money to market Ocean City alone as a destination than what is spent on the entire State of Delaware.

“As we host more visitors here, they need to help support that. It shouldn’t be all on the residents,” he said. 

The bill is ready for action in the House but Thomas said some final changes are being added before it reaches the floor for debate.

“I’m hoping it happens before June,” he said.