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From the Boathouse: Any old port with a low tax rate

April 11, 2013|By Mike Whitehead

Ahoy!

As California struggles financially and sales tax generated from boat sales is dramatically down, yet another state has taken a step to increase its sales tax revenue. Maryland's legislature voted this week to cap the state's vessel tax at $15,000, following suit with Florida.

Now before you start emailing me that this only helps the wealthy, let us review the aftermath of the tax cap in Florida. In 2010, Florida capped vessel sales tax at $18,000, which brought offshore and out-of-state sales back into the state, thus increasing revenues overall. The rationale was that not only would the state receive sales tax that otherwise would not exist, but, for example, local shipyards, marinas, fuel docks, marine supply outlets, restaurants and workers would gain the business from these vessels that otherwise would have been elsewhere.

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A study conducted by Thomas J. Murray & Associates revealed that the state's tax revenues overall increased and people were buying more expensive boats with the extra buying power.

One has to remember that most of the tax revenue generated was from new money coming into the state from local sales. Additionally, I repeat, the local economy benefited by having the boats outfitted, serviced and moored locally.

So, Maryland is closer to establishing a vessel tax cap that would bring sales back to the state from residents who would then not be buying boats in neighboring Virginia and Delaware, as they do now. Do not believe me? Then maybe you will believe the actions taken by John Kerry, who is not alone in moving his assets to save money.

I wrote in my Oct. 12 column, "If you still wonder how high fees and taxes have an effect on boating, ask Sen. John Kerry, who berthed his new $7-million, 75-foot yacht in Rhode Island, and not in his home state of Massachusetts. He would have saved almost $500,000 on sales tax, but he finally paid the sales tax to Massachusetts when he caved under the public pressure. But there is more to the story, as keeping the yacht in Rhode Island will save him about $70,000 per year by avoiding Massachusetts' annual excise tax."

Kerry has a multimillion-dollar yacht. The annual maintenance and upkeep for a megayacht is usually 15% of the vessel's value. So that equates to just over $1 million in annual expenditures that will be spent somewhere.

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