Maryland lawmakers hold hearing on bill to cap excise tax

Posted on Written by Michael LaBella

The boating industry sparred with the Maryland Department of Natural Resources on Wednesday at a Senate committee hearing on a bill that would cap the state’s vessel excise tax.

Senate Bill 90, proposed by Sen. John Astle, D-Annapolis, would limit the tax to $10,000 a boat.

Supporters of Astle’s legislation told the Senate Budget and Taxation Committee that the bill would allow hundreds more boat owners to keep their vessels in the state. They also said it would increase sales not just of boats, but also of boating accessories and related services, according to the (Maryland) Capital Gazette.

Astle said the tax was driving business out of the state.

But the DNR representatives presented a University of Maryland study indicating that a tax cap’s benefits would not outweigh a negative effect on the Waterway Improvement Fund. The fund, fed mainly by vessel excise tax revenue, provides grants for dredging and other projects intended to keep the state’s waters healthy.

Maryland’s boat sales fell from $183 million in 2010 to $162 million in 2011, placing the state No. 26 in the nation in such sales. In 2008, boat sales were $248.5 million. About 4,600 fewer boats were registered with the DNR in 2011 than in 2010. It was the eighth consecutive year that the state registered fewer boats than the year before.

Mark O’Malley, the DNR’s director of boating services, said the tax cap would severely reduce the available funds by eliminating the money that large yacht owners pay.

The excise tax forces a boat owner to pay 5 percent of the value of his boat if it stays in the state longer than 90 days a year. Some in the boating industry point to it as the reason that boat sales in Maryland did not rebound as the economy recovered in 2011.

Susan Zellers, executive director of the Marine Trades Association of Maryland, said her organization offered to pay for half of the study, but ultimately was not included in the process. Frank Dawson, the DNR’s assistant secretary for aquatic resources, said the trade group declined the agency’s offer to be involved.

The bill’s House of Delegates counterpart, House Bill 548, will be heard before the House Ways and Means Committee on Feb. 28.

Click here for the full report.

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