Lawmakers want to cap boat tax

Legislation filed in the General Assembly would limit a state excise tax to $10,000 per boat and allow hundreds more boat owners to keep their boats in the state, proponents of the bills say.


The Capital reported in August the Marine Trades Association of Maryland hoped to propose such a bill. Maryland’s vessel excise tax requires boat owners to pay 5 percent of the value of their boat if they keep their boat in the state longer than 90 days a year.

The bills filed in the House and Senate (House Bill 548 /Senate Bill 90) by Del. Ron George, R-Arnold, and Sen. John Astle, D-Annapolis, would cap the amount at $10,000, a benefit to boat owners whose boats are worth $200,000 or more.

The Department of Natural Resources has shied away from decreasing or capping the tax for years. The tax puts money into the Waterway Improvement Fund, which funds dredging and other projects involving the state’s waters.

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

If the tax keeps large boats away from the state, the economic impact includes less money for services, fuel and other boat-related expenses, and even for hotel rooms, boating industry officials said.

Some boating advocates say capping the tax, as Virginia did years ago and Florida did in 2010, would actually increase tax revenue for Maryland.

“We can sit around and do nothing or we can try to be proactive,” said Susan Zellers, executive director of the Marine Trades Association of Maryland. “This is a bill that’s going to increase the number of boats registered in Maryland, create jobs and increase spending.”

The excise tax is becoming more of an issue for an industry struggling to stay afloat. Some say it’s why boat sales didn’t rebound in Maryland in 2011.

Maryland’s 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.

Additionally, about 4,600 fewer boats registered with the state’s Department of Natural Resources in 2011 than in 2010. It was the eighth consecutive year the state registered fewer boats than the year before.

Zellers said passage of the legislation will bring a couple hundred more large boats to the state.

HB 548 is scheduled to be heard in the House Ways and Means Committee Feb. 14. The Senate’s Budget and Taxation Committee is scheduled to hear SB 90 on Feb. 20.

A $10,000 cap was proposed in the House of Delegates in 2002 by the Anne Arundel, Eastern Shore and Southern Maryland delegations. But it died in the House Ways and Means Committee.

George said the statistical case for the legislation is stronger now than it was in 2002.

“We are a boating mecca. We’re in the land of pleasant living, sailing,” George said. “We’re losing that to other states.”


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