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Fact Check: Did Tillis give tax breaks to yacht owners?

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— One of the most common digs Democratic-allied groups are taking at state House Speaker Thom Tillis in his U.S. Senate campaign involves a tax break on boats and planes. 

Tillis, a Republican, is running to unseat first-term Democratic Sen. Kay Hagan. North Carolina’s U.S. Senate campaign is already the subject of millions of dollars in television spending by non-candidate groups on both sides of the political divide. 

Democrats have been working hard to paint Tillis as an advocate for legislation that favors the wealthy over ordinary North Carolinians, and this “yachts and jets” claims fits right in with that message. 

A recent Senate Majority PAC ad, for example, criticizes Tillis for how the GOP-led General Assembly dealt with education funding and then adds, “Meanwhile, Tillis gives tax breaks for yacht and private jet owners.”

The most colorful ad playing on the claim this summer is also by is also by Senate Majority PAC. It features a teacher leading a troop of schoolchildren to a marina, where they ask to use a boat since the school’s classrooms are too crowded. In the Democratic Senatorial Campaign Committee’s latest ad, an obviously well-heeled young woman carrying a large red purse and trailed by two security goons boards a private plane as the anchor says that Tillis has been “giving tax breaks to yacht and jet owners.” 

While it’s certainly attention-grabbing, this ocean-going tale has a few leaks.

BACKGROUND: North Carolina has capped the sales tax paid on airplanes since 1957 and on boats since 1967, according to the state Department of Revenue’s most recent “Tax Expenditure Report.” Currently, both boats and aircraft are taxed at 3 percent of their purchase price, up to a cap of $1,500. For the buyer of a $1 million vessel, that means a break of $28,500 of the $30,000 they would have paid if there were not cap. 

In 2013, the General Assembly authored a tax reform package aimed at lowering rates residents pay on income and other taxes while eliminating tax breaks for many items. For example, the tax on a ticket for a movie or minor league baseball game used to be capped, but it is not any longer. Lawmakers also did things such as eliminate sales tax holidays. 

The 2013 tax reform bill neither raised nor lowered the cap on the sales tax charged for boats and planes. But the case made by those using the yachts and jets claims is that, by failing to get rid of the loophole in the 2013 tax reform bill, the General Assembly generally, and Tillis in particular, is responsible for keeping it.  

WHY NO CHANGE: “It was just one of those pieces we didn’t get to,” Rep. Julia Howard, R-Davie, said of the boats and planes sales tax exemption. “Nobody said don’t look at this or don’t look at that.” 

Howard was one of the lead authors of tax reform legislation in the House and called the 2013 bill “a big lift” that couldn’t get to everything. 

Going into 2013, legislative leaders knew that a promised broad-based tax reform would be difficult to deliver because any number of constituencies would try to defend existing tax loopholes against closing. 

Of the plans put forward, the most far-reaching may have been Sen. Bob Rucho’s effort to drop the top state income tax rate to 4.5 percent by relying heavily on sales tax. At one point during the reform effort, Rucho, R-Mecklenburg, publicly broke with members of his own chamber because they backed off the push toward a consumption-based model that relied heavily on sales taxes.

Interviewed this week, Rucho said there are a number of loopholes that the 2013 legislation didn’t close, but both he and Howard said another tax reform package would be put together in 2015.

“That will be in our next phase as we continue to lower the personal income tax rate,” Rucho said of the plane and boat exemption. 

Despite being critical of House leaders and the governor during the 2013 tax reform effort, Rucho declined to pin the yacht and jet exemption on Tillis.

“To say that Tillis did that is totally wrong,” he said.

MORE CONTEXT: The tax cap for boats and planes is similar to the tax break given to those buying cars and pickup trucks in the state. 

A 1989 law exempts personal automobiles for the state sales tax rate of 4.5 percent and instead imposes a “Highway Use Tax” of 3 percent for most vehicles. That exemption will cost the state an estimated $517.4 million during the fiscal year that started July 1. 

By comparison, the boats and plans exemption will cost the state $16.2 million over the same time period, according to the Department of Revenue

The difference, of course, is that far more residents are buying new and used cars to get to work and take their children to school every day than million-dollar boats or multimillion-dollar Cessna Citation jets. 

MAKING THEIR CASES: “As Speaker of the House, Thom Tillis had the ability to overhaul the tax system in any way he saw fit, and he could have put everything on the table,” said Ty Matsdorf of Senate Majority PAC. “He could have demanded a deal that closed loopholes to pay for things like more teachers. Instead, he continued to give yacht and jet owners a break. Just because these tax breaks had been in place before doesn’t mean that they had to be continued under Tillis. Tills had the ability, and chance, to end them.”

Tillis’ campaign, of course, has a different take. 

“This is yet another completely meritless and incredibly hypocritical attack against Thom from Kay Hagan’s liberal special interest allies,” said Tillis spokesman Daniel Keylin, who points out that Hagan served as a high-ranking lawmaker while the tax break was in place.

“They conveniently neglect to mention that, as chief budget writer, Hagan retained the cap at the same time she was busy raising taxes on middle-class North Carolina families,” Keylin continued. 

Fact Check RedTHE CALL: Where this claim falls on WRAL’s fact-checking scale depends whether you take the view that failing to act against a loophole counts as endorsing that particular action, or whether the suggestion that Tillis “GAVE” a tax break misleads voters who might not know the particulars behind this tax. In order to make this call, your fact-checker put this question to six other seasoned journalists on the WRAL News team. 

Two members of our panel took the view that, if the legislature was in the business of reforming the entire tax code, it’s not misleading to suggest there was an opportunity to take up the yachts and jets loophole. This viewpoint empathizes with the notion that those buying planes and boats are purchasing something beyond basic transportation and might well be able to chip in more toward education, which is the case made in the commercials. 

But stronger sentiments were put forward that Democrats are trying to say Tillis, or at least the legislature that he led, did something that he did not do. This view holds that one cannot give a tax break that somebody already has had for more than 20 years. In other words, if this conversation were happening outside of a political context, it would clearly be wrong to say that Tillis or the General Assembly “gave” the tax break in 2013. Also lacking is any evidence that Tillis personally advocated one way or the other on this particular tax break. 

Due to the leaky logic behind the yachts and jets claim, we give it a red light.


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Isle of Sheppey Sailing Club's Round the Island Race 2014

Sailors from across the UK are preparing to take part in the longest dinghy and board race in Europe, held right here in Kent.

Isle of Sheppey Round-the-Island race 2013

Isle of Sheppey Round-the-Island race 2013

The Isle of Sheppey Sailing Club’s Round the Island Race will take place this Saturday, August 30.

It’s the 56th event and is likely to attract enthusiasts from across the country.

Club commodore Tim Harris says traditionally it’s been more sailing dinghies and catamarans which take part, but recently it has diversified with windsurfers and paddle-boarders joining.

There will even be one competitor braving the waters in a kayak with a sail attached to the back, for the first time ever.

“We have had quite a lot of interest from paddle-boarders this year and rowing clubs including Queenborough,” he said.

Club members have in the past welcomed in the region of 300 boats, but the numbers really depend on the weather forecast. They would be happy with 100 plus entries this time as it’s an important source of income for the club.

Isle of Sheppey Round-the-Island race 2013

Isle of Sheppey Round-the-Island race 2013

Best places from which to watch the action include the Kingsferry Bridge, Harty, the Minster Leas, Leysdown and Shellness.

“The Kingsferry Bridge is where you get the most excitement with people turning the boats over – there’s often a bit of drama there,” Mr Harris said.

Registration, which costs £25 in advance or £30 on the day, opens at 7am.

There are four different starts to the 40-mile race, which is worked out on handicap, and a separate one for the paddle-boarders. Slower boats start at 10.30am; medium speed at 11am; fast dinghy, mono-hulls and slower catamarans at 11.30am and faster catamarans at midday.

It all starts and finishes at the club in Marine Parade, Sheerness, where there will also be a burger wagon and refreshments.

Visit www.iossc.co.uk or email info@iossc.co.uk


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Cantiere delle Marche appoints Denison Yacht Sales as US dealer

By Merijn de Waard

Cantiere delle Marche has appointed Denison Yacht Sales as the US exclusive dealer for their new range of explorer yachts. The two companies have worked closely for several months, resulting in the sale of a Darwin Class 102’ (formerly 96’) and the signature of one letter of intent on a Darwin Class 96’.

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Vasco Buonpensiere, Sales and Marketing Director of Cantiere delle Marche, comments, ”there is no doubt about the need for Cantiere delle Marche to have someone who transfers our values, mission and vision on a daily basis in the US market. Beside a strong marketing plan, we are also working on a dedicated range of vessels which are engineered and designed exclusively for the American market, after having interviewed more than 250 potential CdM yacht’s owners in the US. This wouldn’t have been possible without such an experienced and proactive partner.”

Bob Denison, founder and President of DYS strongly believes in the success of CdM in the North American Market. He comments, “the Denison team is thrilled to be representing CdM in North America. As a grandson, a nephew, and a son of aluminum boatbuilders here in the U.S., this product is very special to me personally. I strongly believe in the CdM and can’t wait to introduce the American market to the product.”

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Cantiere delle Marche produces vessels in a limited number of units. The Darwin Class and the Nauta Air Explorer Yachts combine the luxury specifications of a superyacht with the size of a steel hulled mini-ship designed for long range use, at an average speed of 10 knots with ranges up to 7000 miles. The Italian shipyard will bring two boats to American Boat Shows in 2015 in Miami and Fort Lauderdale.


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Nereid’s Rally aims to bring more yachting tourism to Tobago

Nereid’s Rally will see boats leaving Tobago for Guyana, Suriname and French Guiana next month. Yachts will also be leaving from Trinidad.

The organiser, David Mussnot explains why he chose Store Bay as a starting point for the rally, which will see participants setting sail at 9 a.m. on September 2.

“It is the ideal jumping off point for yachts heading for South America. Tobago is on the direct sailing path to Guyana and Trinidad has the facilities yachts need to make preparations,” he said.

He hopes the rally will result in a growth in yachting tourism for Tobago.

“The event is growing exponentially as people realise that there is fine sailing to be had south of TT during the hurricane season. Tobago is often bypassed by cruisers as it is considered off the beaten track for the majority of sailors heading north. As sailing to Guyana, Suriname and French Guiana during the hurricane season increases in popularity, Tobago will find itself at a new crossroads, and will benefit from a different kind of yachting tourism,” states Mussnot, who has teamed up with Store Bay Marine Services on Pigeon Point Road for the Tobago leg of the rally.

“Without the facilities offered by Store Bay Marine Services it would be impossible to start the rally from Tobago as there would be no support services for those taking part.”

The event is also expected to raise the profile regionally of, not only Tobago, but all of the destinations planned.

“Traditionally, these areas have not been thought of as cruising grounds, and we hope that the rally will go some ways towards educating cruisers to the wide range of facilities offered to them in these areas, as well as the natural beauty of these countries,” adds Mussnot.

All yachts taking part in the rally are expected to finish at Saint Laurent du Maroni in French Guiana on October 3.


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Boat sales in state expected to rise this year

“I bought my boat a month ago,” said Lance Lavignette, 52. “We have gone out in it quite often in Falgout Marina. My wife and I love to fish.”

Boating is a way of life for many people in the state, and the National Marine Manufacturers Association’s annual report released in May shows Louisiana is No. 9 in the country in boating sales.

The $478 million in boating industry sales in the state that include trailers and related equipment dropped 5 percent in 2013, but sales are expected to grow this year, said Sarah Ryser, National Marine Manufacturers Association director of communications.

“We’re anticipating continued steady growth this year, with a 5 to 7 percent increase in new powerboat retail sales,” she said.

The manufacturers association projects there will be one boat for every 5.6 households in Louisiana in 2014.

This is good news for the 866 boating businesses the association lists in the state in its annual sales report.

Shawn Robert, manager of H H Marine Inc., 5196 La. 311, Houma, said he has seen a continual upswing in boat sales in the past few years as the economy recovers.

“Boat sales have definitely been up this year over last year,” Robert said. “Sales last year were an increase over 2012, so it’s definitely in an upward swing.”

Boat sales are most prosperous in the spring and fall months, he said, when people buy boats for fishing and hunting.

“Typically spring is the biggest season for us. It’s when we sell a lot of our fishing boats, mostly bay boats and saltwater fishing boats. In the fall we sell a lot of hunting boats, mostly surface-drive hunting boats and boats for extremely shallow waters,” he said.

The company, which has operated out of Houma since 1970, sells boats costing $12,000 to $70,000, Robert said.

“The smaller aluminum boats are relatively inexpensive. When you get into the much bigger ones with all the bells and whistles, the price gets up there. On the higher-end boats, people typically put higher-end GPS, stereo and radar systems, and power poles to anchor the boat down. That raises the price,” he said.

Across the country, nearly 200,000 boats were sold in 2013, a 2 percent increase from 2012 when the industry began bouncing back from the recession.

The National Marine Manufacturers Association now estimates 37 percent of the nation’s adults, or 89 million people, participated in recreational boating in 2013.

According to its report, 60 percent of boat owners use their vessels for fishing. In Louisiana, the state issued 418,577 recreational fishing licenses in 2013.

Florida and Texas were the country’s two biggest boating states last year with sales of nearly $2 billion and $1.2 billion, respectively, the association said.

Boat and accessory sales nationwide in 2013 totaled nearly $36.7 billion, up 3.2 percent from the previous year, the association added.

Staff Writer Jordan Gribble can be reached at 857-2208 or jordan.gribble@houmatoday.com. Follow him on Twitter @JGrib_Courier.


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