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.

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