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Capping the sales tax plugs a leak in the boating economy | Editorial

There has been some legislative stirring to cap New Jersey’s sales tax on recreational boats at $20,000, and no doubt the sneering impulse is to dismiss it as a giveaway to help millionaires buy new toys.

Yet even with the treasury empty, consider this: Some tax revenue is better than zero tax revenue, and any boat builder or marina operator or service yard mechanic will tell you that consumers are now motivated to shop elsewhere – or worse, dock their boats in other states.

Rather than pay 7 percent tax here, they shop in Florida, which has an $18,000 sales tax cap. They shop in Maryland, which has a $15,000 cap. They shop in New York, which has an $18,900 cap in most counties.

New Jersey offers no such cap. So a $500,000 boat built and bought here carries a tax bill of $35,000. So would anyone in their right mind pay an extra $17,000 for the privilege of buying it in New Jersey?


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The answer is that most of them don’t anymore. Just ask Rick Weber, the manager of South Jersey Marina in Cape May. From 2000-08, sales generated an average of about $1.5 million in tax revenue for the state each year. The recession then hit, but that wasn’t the worst of it, he says. Since Florida capped its tax in 2010, he says he has sent an average of $400,000 annually.

Even if consumers buy here and register elsewhere, they can dodge the tax and New Jersey loses in myriad ways.

A ST-10V form exempts the boat from sales tax on the proviso that it remains exclusively outside New Jersey. In the last six years, South Jersey Marina exempted $17 million in tax via ST-10V filings on the sale of 14 boats now docked out of state – and they won’t return to New Jersey without triggering penalties, which deprives our marinas from fuel, dockage, and maintenance income that may reach six figures annually.

So this cap, which passed the Senate Budget Committee last week, isn’t the SS Giveaway. It’s more about keeping a $2 billion industry competitive. In a state surrounded on three sides by water, it’s an activity that should be encouraged by this bill’s passage.

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