After record sales of $3.6 million in 2018, Springline Yacht Sales in Mystic, Conn., started this year with numbers exceeding those from last year. So far in 2019, the company has done $3.9 million in business, and owner Rick Dieterich told TheDay.com that he expects another $600,000 in the second half of the year.
Dieterich told the newspaper that there were “probably a multitude of factors involved,” but he attributed at least part of the upswing to the Connecticut General Assembly reducing sales tax on boats, engines and trailers last year from 6.35 to 2.99 percent.
The intent was to make it easier for dealers in the Nutmeg State to compete with counterparts in Rhode Island, which doesn’t charge sales tax on boats. To the south, New York’s combined county and state sales tax range from 7 to 8.875 percent, but only the first $230,000 of a boat’s price is taxable.
Kathleen Burns, executive director of the Connecticut Marine Trades Association, said her organization worked for four years to get the tax reduced. In February, Gov. Ned Lamont introduced a budget that would revert the tax to 6.35 percent, but the Finance, Revenue and Bonding Committee bill would keep it at 2.99 percent. Sen. Heather Somers (R-Groton) said retaining the lower tax would be a “very wise and thoughtful decision.”
At a public hearing on Senate Bill 877, which included many revenue items, several people reportedly urged the retention of the 2.99 percent sales tax rate for boats.
Burns said average boat sales were up 41 percent per month, that marinas are reporting an occupancy rate increase from 65 to 78 percent and that 85 percent of dealers said they’ve hired additional full-time personnel since July 2018. She added that the winter season was up 8 percent.
According to The Day, Atlantic Outboard, a new- and used-boat dealer in Westbrook, Conn., invested more than $1 million in the business in the last year, something the company wouldn’t have done if it thought the tax reduction was temporary.
Somers said that the tax needs to be in place for a longer term to see consistent results. “Give us five years at this rate, and we will show you increased revenue,” she said.