Maryland tax-cap bill passes, but with a catch

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A bill written to cap Maryland's excise tax on boats passed the state senate unanimously Friday, but it no longer caps the tax.

It no longer has anything to do with that tax or with addressing the concerns that prompted the marine industry to call for a cap.

Senate Bill 90 is now a measure to put 0.5 percent of the money from the motor fuel tax into the Waterway Improvement Fund, which funds dredging and other projects intended to keep the state’s waters healthy, according to the Annapolis Capital Gazette.

“That’s not what I intended when I put the bill in,” Sen. John C. Astle, D-Annapolis, told the paper. “But we’ve been trying for some time to get an increase in money to the Waterway Improvement Fund, so I’ll take it and declare victory.”

Republican Rep. Ron George, who sponsored the same legislation in the House, said the boating industry and the Marine Trades Association of Maryland, which both contend the tax cap is needed to revive boat sales in Maryland, couldn’t overcome opposition from the state Department of Natural Resources.

George has convinced the office of House Speaker Michael E. Busch, D-Annapolis, to send a letter on his behalf asking Department of Natural Resources to work with the trade group before next year’s session.

Maryland’s vessel excise tax requires boat owners to pay 5 percent of the value of their boat if they buy the boat in the state or keep their boat there for more than 90 days a year.

Brokers say boat sales are lagging in Maryland because residents go to tax-free Delaware or to Virginia, where there’s a 2 percent tax and a $2,000 cap.

Maryland’s boat sales fell from $183 million in 2010 to $162 million in 2011, placing the state No. 26 in the nation. In 2008, boat sales were $248.5 million. Supporters had argued the bill would draw more boats and larger boats to the state, stimulating Maryland’s marine industry not just by increasing the sale of boats but by expanding the demand for slips, accessories and maintenance services.

Association executive director Susan Zellers told the Gazette that the cap has been a frustrating experience.

Click here for the full report.

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