Baltimore Sun stands against boat tax cap

Posted on 05 March 2013

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Capping vessel excise taxes on yachts bought in Maryland might boost sales, but it would also undermine the state’s $2 billion boating economy.

That’s according to an editorial appearing this week in the Baltimore Sun regarding the debate in the Maryland legislature about capping vessel excise taxes at $10,000. The Sun opinion suggests reducing the state’s dependency on the excise tax and instead providing incentives for boat owners to keep vessels in the state because that would stimulate the local economy.

“The latest proposal ... could do more harm than good,” the editorial read.

The Waterway Improvement Fund — the entity responsible for the dredging and oversight of Maryland’s waterways, facilities and buoys — should be less reliant on excise taxes and more dependent on other fees. Providing incentives for people to buy and keep boats in Maryland could be one way to increase that fee revenue.

Though the tax would only affect boats more than $200,000, that is a customer base worth retaining, the editorial stated. Although those high-end boats represent less than 2 percent of annual sales, they account for nearly a third of excise tax revenue.

“When those vessels are kept in Maryland marinas, they likely generate a lot more revenue in repairs, service, refueling and other charges,” the editorial stated. “Considering that boating is estimated to generate about $2 billion in economic activity and accounts for about 35,000 Maryland jobs, why not offer some incentive to buy or keep a boat here? Some even believe that additional boat sales could offset the $3 million in annual revenue that the cap would cost the state.”

A study released last week by the University of Maryland's Environmental Finance Center and commissioned by the Maryland Department of Natural Resources showed that a tax cap wouldn’t stimulate enough additional sales to recover lost revenue from the decrease. Instead, Maryland should reduce dependency on the excise tax through increases in licensing and registration fees that haven’t been adjusted since the 1960s.

The state could also apply the state’s 6 percent sales tax to boating repair or maintenance labor and then direct the revenue to the Waterway Improvement Fund, though that suggestion would likely be controversial, the opinion piece stated.

“The point is to find the means for boaters to pay for themselves much as Maryland's drivers finance road improvements through the Transportation Trust Fund,” the piece read. “Capping the tax might help some businesses in the short run, but it fails to make the industry self-sustaining, which should be the primary goal of any change in tax policy.”

Click here for the full editorial.

Comments

5 Wednesday, 06 March 2013 14:37

By Jeff Erdmann

Large boats are highly mobile by design; owners & captains go to where they are welcome and avoid areas that cost too much or are unfriendly.
Maryland lawmakers may not need such a large waterway fund if they discourage boats from using their water ways through excessive taxation.

4 Wednesday, 06 March 2013 12:47

By john

The opposition to the facts and real world results is baffling. a study was performed and quoted over and over again by the opposing govermental agency yet Florida's success is clear proof of the potential true outcome. this is a case of not being able to thing outside an extremely small box.

3 Tuesday, 05 March 2013 23:15

By Michael Sciulla

Skip, you're right on target. In fact, Florida generated 10 times as much revenue as was initially projected by legislative staff when they capped the sales tax on boats.
Here's a link to an article from the St. Augustine News that tells the whole story.
http://staugnews.com/2012/03/03/florida’s-maritime-tax-law-has-national-import.html

2 Tuesday, 05 March 2013 22:18

By Mikie

*** As I Posted on the BSUN Website - Not surprising that this RAG is Pro Fees and against boating....Poor effort and the author hides with an OUR TAKE approach - LAME, but not surprising from this so called media source!
_______
Florida data would indicate otherwise! And as the survey and article point out it doesn't take many additional boats to bridge this gap. We need to get past the politics and make Maryland Compettive and Attractive for boaters. Virginia, Florida, Rhode Island and Delaware are picking our pockets for registrations and excise tax!

Yes, registration fees need to be adjusted. But smartly, not, as proposed last year - I don't understand how our legislators can be SO disconnected with reality. This would help the WIF.

Let's face it though - GROWTH is what is needed, not the extraction of more from the few. More participants, more boaters, more boats, more sales and more revenues for Maryland - we have to grow out of this economy and Florida has shown that this model WORKS!!!

1 Tuesday, 05 March 2013 17:55

By Skip Zimbalist

The experience in Florida is that tax revenues increased significantly as a result of the tax cap. It is difficult to understand why Maryland should not enjoy the same benefit.

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