Maine cuts sales tax on boat purchases

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Maine Gov. John E. Baldacci recently signed into law a provision that ensures non-resident boaters will pay less in sales tax on boat purchases in the state.

The new law, which takes effect Aug. 1, significantly reduces the amount of Maine sales tax that will need to be paid by non-residents who choose to purchase and keep a boat in Maine, the Maine Marine Trades Association reports.

Prior to the passage of the bill, non-residents who bought a boat in Maine were required to pay the prevailing sales tax (currently 5 percent) if they wanted to use the boat in the state for more than 30 days. In addition, non-resident boaters who used their boats in Maine during their first year of ownership might be subject to the use tax if no sales tax had been paid in another jurisdiction.

The new law allows for an exemption that effectively brings the tax rate down to 2 percent.

“This is a huge step in the right direction for our industry,” MMTA president Ron Defoe said in a statement. “Lowering the sales tax helps make our boatbuilders and dealers more competitive in the marketplace. The more we can sell, the quicker we can rebound from what has been a really tough time for our industry.”

The bill’s primary sponsor, Rep. Don Pilon, noted that “for me, this was really a bill about jobs; jobs in one of Maine’s oldest and respected industries. We know that these are good-paying jobs with benefits, they require a highly skilled work force and as a state these are the kinds of jobs that we want to encourage.”

Non-residents who purchase a boat in Maine and use it in the state for more than 30 days are entitled to a reduction in sales tax that effectively brings the sales tax rate to 2 percent. This applies to sales completed on or after Aug. 1, 2010.

Non-residents who purchase a boat elsewhere and bring it to Maine within the first year of ownership and who have not paid sales tax elsewhere may be subject to use tax – but at 2 percent – effective if vessel is found to be in Maine on or after Aug. 1, 2010.

Click here for the full release.


7 comments on “Maine cuts sales tax on boat purchases

  1. Susan

    So does this mean that residents will pay the full tax, but non-residents get the discounted tax rate? Doesn’t sound like much of a deal for Maine residents. Increased jobs perhaps, but with less tax revenue usually means the residents will be asked to make up the difference.
    I wonder if, in the long run, how much this will save those non-residents, if they are titling their boats in their resident state. Most states give tax credit on purchases, from another state, up to the tax amount due in the resident state. If someone lives in a 6% state, pays only 2% instead of 5% in Maine, aren’t they going to have to pay the difference when they title in their 6% state?

  2. acquire

    I don’t understand the details… but the way this reads, I get to pay a $200,000 fee to bring $10mm foreign flagged boat into Maine to cruise there for 31 days? Wow! What a deal !  

  3. George

    Sounds like a lot of red tape that will confuse more people than it will benefit.  Things like this need to be uniform across the States with no tax advantages for people going outside the state where the boat will be used and docked.

  4. Nick in California

    California raised the sales tax last year, so that more jobs would leave the state. At least Maine is doing something. California residents buying a large boat, used to start an Oregon corp. put the boat  into the corp. and bingo no tax. But California has just passed a new law making that practice illegal.

  5. Taka

    I am building a boat in Maine to be finished this August or September.  I was trying to decide whether to bring it back to California and pay the 10% use tax, or leave it in Maine and cruise around during the next two summers.  I had already budgeted in, both the Maine or Calif tax into the total construction costs. With passage of the exemption, I took the amount I saved and rather than pocket it,  I immediately put it back into more construction, therefore more jobs, materials supplied by subcontractors, decided to stay in Maine, purchase supplies, fuel and rent dock space here, pay the Maine sales tax on all of the above, and then gave the workers at the boat yard a very nice bonus.
    I don’t believe trickle down economics is the only solution to all the problems, but it is one of many solutions that need to be incorporated.
    This is just a small lesson in microeconomics: Maine wins and California loses.

  6. Greg

    Buy a pick up, kitchen cabinet or even a scented candle in Maine and pay 5%. Buy a yacht, it’s 2%.  Its the new Leona Helmsley tax policy — only the little people pay taxes. Perhaps soon we’ll eliminate property taxes on waterfront mansions, sales taxes of vehicles that cost over 100k and maybe we can offer every out-of-state millionaire the right to vote here. I’m sure it will make them feel better.

  7. Capt Walt

    Does this tax reduction also apply to Maine Residents?
    I bought a brand new Shamrock 246 this summer of 2010 to use as a Charter Boat and the Town charged me 5% Sales tax.
    Maybe I should demand a refund.
    We need more tax cuts in Maine to bring business into the state; which in turn will create jobs.
    Yes Trickle down economics works as President Reagan and Pres Coolidge have proved.
    New Hampshire has No Sales tax and looks more inviting every day.
    Remenber that you Can help restore America.
    Capt Walt

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