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Chasing yacht tax ‘a waste’

DeVore, Tran abstain from vote that would close loophole. Bill might be used as a bargaining chip in summer talks.

February 20, 2008|By Brianna Bailey

Assemblyman Chuck DeVore called a failed Senate bill to close a tax loophole on yachts and other big-ticket luxury vehicles like RVs and private jets “budget dust” Tuesday.

Republican Assembly lawmakers including DeVore and Van Tran moved to block the bill Tuesday that would close a tax loophole that allows yacht owners to avoid taxes by stowing their boats out of the state for 90 days.

Changing the law could net as much as $26 million in additional tax revenue for the state over the rest of this fiscal year and the next, according to some estimates.

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“$20 million in the context of the budget is virtually nothing,” DeVore said. “While we are wasting our time, the budget issue gets worse every day, every month.”

DeVore, who voted in favor of another version of the bill last week, which would have required people who buy private jets, large yachts and RVs to store the luxury items out of state for an entire year to avoid state sales and use taxes, abstained from voting on the issue again Tuesday at the request of Republican leadership.

“My position has not changed at all,” DeVore said. “The Democrats are kind of using it as a symbolic issue. While we have a multibillion dollar deficit, this issue would result in no more than $5 million in revenue this fiscal year.”

The yacht tax issue is likely to come up again and Republican leaders may even use it as a bargaining chip in budget talks this summer, Tran said.

Many Democratic lawmakers view it as a tax break for the wealthy while the state slashes social programs for the poor.

Tran, who abstained from voting a second time on the issue Tuesday, said he was still willing to weigh each side of the issue if it came up again.

“On the one hand, you consider the policy and you want to make sure everyone is treated fairly,” he said. “On the other hand, you want to make sure you don’t stifle businesses.”

California temporarily extended the period to avoid taxes from 90 days to one year in 2004.

A 2006 impartial legislative analysis found that tax revenue grew during this period and the negative economic effect of the extended waiting period was minimal.

Gov. Arnold Schwarzenegger said Tuesday at a news conference in Sacramento he was in favor of closing the loophole.

“I think that we can save $26 million, and this is $26 million that we could use for education or for other important programs,” Schwarzenegger said.


BRIANNA BAILEY may be reached at (714) 966-4625 or at brianna.bailey@latimes.com.

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