By Benjamin Rothstein

DOVER – Dover City Council unanimously passed an ordinance Monday that increases the city’s lodging tax from 1.5% to 3%, which allows the state to collect it on the city’s behalf.

The 1.5% tax was originally devised to attract tourists, but the council felt that this had not been effective. As a result, they were giving up an extra $500,000 per year, officials say.

The 1.5% also meant that the city was responsible for collecting the tax on their own. The state had no recourse for this, so hotels could simply not pay the tax if they so choose. At 3% though, the Delaware Division of Revenue can collect the tax along with the state’s 8%, subjecting hotels to the state’s collection penalties.

Another justification was that Dover residents would be the least impacted and would benefit. Lodging tax tends to only be paid by tourists, yet tourists use city services that residents pay for. As such, council members believe that tourists will now be paying their share. The difference for those paying the tax is minimal, an estimated increase from $1.50 at 1.5% to $2.70 per night.

The first 1.5% will still be used for infrastructure, as originally written, but the second half will be used for the general fund.

Following the city’s lead, Kent County Levy Court has been discussing implementing a lodging tax of their own, and there was concern regarding whether the potential county tax would stack with the city’s.

“(The county) would not be able to tax property in the city of Dover. Conversely, we would not be able to tax property outside of city limits,” said Dover city manager Dave Hugg.

“Previously, unique in the code, Kent County had the authority to tax in the city, unlike the other two counties, but that was repealed by the state legislature ... which is part of the reason why we only did one-and-a-half percent. We were hoping that the county wouldn’t do the full three and that we would share it,” clarified councilman David Anderson, who was also a sponsor of the ordinance.

The increased rate will take effect July 1, according to Mr. Hugg.