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Boat tax exemption boosts R.I. marine industry

Rhode Island's tax climate makes it appealing for boaters, an issue that recently received national attention when it was reported that Sen. John F. Kerry, D-Mass., docked his $7 million luxury yacht, Isabel, in Rhode Island.

Critics contended that Kerry stashed his boat in Newport to avoid paying taxes on the vessel in Massachusetts, but the flap served to emphasize Rhode Island's reputation as a tax-free harbor of refuge that encourages boaters to buy and dock their vessels in the Ocean State, generating business, revenue and jobs, according to a report in the Providence Journal.

The state's tax policy also has a ripple effect, said local sailor and accountant Grafton H. "Cap" Willey IV. Vessel owners from other states "have their work done at a [local] shipyard, they spend their money in the Rhode Island economy and it helps the Rhode Island boat, hospitality and marine businesses," he said.

The Rhode Island Marine Trades Association, which represents the state's boating industry, counts more than 2,300 businesses in the industry with about $1.6 billion in overall annual sales.

There are more than 6,600 workers directly employed in the industry, earning in the aggregate nearly $260 million in wages, according to the group's latest report, published in February 2008, the newspaper reports.

Rhode Island is one of only seven states that do not levy a sales tax on boats, according to BoatU.S., a group in Virginia that represents recreational boaters and provides towing and other services for boaters nationwide. (The others are Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.)

"Particularly in the Northeast, from an owner's standpoint, [Rhode Island is] a very friendly place to have a boat," said David Kennedy, who compiled the tax survey for BoatU.S.

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