When Connecticut Gov. Dannel Malloy's budget proposal is unveiled today, it will call for removing four marine-related tax exemptions from the state's 6 percent sales tax.
Grant Westerson, executive director of the Connecticut Marine Trades Association, told Soundings Trade Only that the net result would be another blow to the state's struggling industry and, in the end, a losing financial proposition for the state. Westerson said the sales tax exemptions to be eliminated include:
- Winter storage fees
- Labor fees on maintenance and repairs
- Brokerage commissions
- Credit for trade-in values
"None of these [exemptions] are gifts; they're meant to level the playing field against Rhode Island," Westerson said.
Rhode Island exempts year-round boat storage and maintenance and repair services from the sales tax.
"We've started to turn a corner," Westerson said. "We don't need a setback like this."
The association is "power-mailing" postage-paid postcards to Malloy, urging him to maintain the exemptions for the sake of the industry and the state's boaters. He urges all interested parties to write Malloy to protest his budget plan.
Westerson said eliminating the winter storage exemption is an example of the plan backfiring. He notes that 108,000 boats are registered in the state. Because 75 percent are less than 26 feet, most are stored in driveways and backyards. About 10,000 are stored commercially each winter. At an average of $300 to $600 a year, that translates to a $300,000 to $450,000 tax gain for the state.
"My question is how much business is the state going to lose to Rhode Island because of this," Westerson said. He estimates that $3 million to $4 million in sales tax and boatyard work fees will migrate across the state border. "The state is not going to make any money on this."
Malloy's budget comes on the heels of state Sen. L. Scott Frantz's introduced legislation that would cut the sales tax from 6 percent to 4 percent on boat purchases and give buyers as much as a million-dollar-a-year break. The bills await action in the Finance, Revenue and Bonding Committee.
Frantz contends that a tax cut would help the state's struggling marine industry survive. Estimates are that marine-related jobs in the state have been cut by two-thirds in recent years, to about 4,500.