New York is capping its sales tax on yachts in a bid to lure back business from Florida and other locales that charge less.
But Florida's yacht brokers say they're not worried that the move will cost the Sunshine State much — if anything.
That's because Florida has a huge lead over New York in yacht sales, and many New Yorkers bring their yachts to Florida for the winter. So, even if New York picks up some extra sales, those owners probably will spend money at Florida's marinas, repair yards and other services.
"We won't lose many sales to New York in the grand scheme," said Jeff Erdmann, chair of the public affairs committee for the Florida Yacht Brokers Association, which pushed for Florida's tax cut on yacht sales in 2010. "We still have the better weather."
What's more, tax cuts tend to boost yacht sales overall, serving as a "net positive," Erdmann said.
New York capped its sales taxes on yachts as part of its just-approved state budget. Starting June 1, buyers of yachts in the Empire State will pay tax on only the first $230,000 of the purchase price — or in most counties, 8.25 percent or $18,975.
The measure has drawn political fire as a giveaway to the rich, but Chris Squeri, executive director of the New York Marine Trades Association, said the measure simply aims to "level the playing field" with Florida and other areas, "so New York can get some tax, instead of nothing at all."
In 2010, when the Great Recession sent marine sales plunging, Florida limited sales tax to the first $300,000 of a boat's purchase price — or $18,000 in tax.
The Florida Legislature's revenue estimating committee projected that the tax cut would cost the state as much as $1.4 million the first year. But instead, state tax collections on yacht sales rose more than $13 million the first year, Erdmann said.
That's because buyers, who previously spent big sums to form offshore companies to skirt the state tax, found it cheaper and easier to simply pay the Florida tax outright, he said.
Maryland followed Florida's lead in 2013 and capped its sales tax on boats at $15,000. New Jersey also is looking to cap its yacht sales-tax at $20,000 to better compete.
New York's Squeri said his group has no hard numbers on how much the new cap might generate in extra yacht sales for the Empire State. The effect may take two or three years to see, he said.
Yet after the Great Recession and Hurricane Sandy, New York's marine industry clearly can use help, Squeri said. Boating in New York trails 2009 levels. Boat registrations are down, and recovery in the state's marine sales lag the U.S. average, according to the National Marine Manufacturers Association.
In 2013, sales of new power boats, engines, trailers and marine accessories — including yachts — increased roughly 5 percent nationwide. But those sales rose just 2.6 percent to $552 million in New York, compared with a 15.7 percent jump to $1.95 billion in Florida, the national association said.
Credit: D. Hemlock, SunSentinel
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