Our say: Legislature gives boating industry a break

Posted: Friday, April 12, 2013 9:00 am

Our say: Legislature gives boating industry a break

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Given the trend in state government in past years, it’s noteworthy any time legislators approve a limit on taxes. And we agree with the Marine Trades Association, state Sen. John Astle and Del. Ron George, all of whom worked hard on the newly approved cap on the vessel excise tax: The measure should boost the struggling Maryland boating industry.

The 5 percent excise tax is imposed when boats are sold and when they spend more than 90 consecutive days in Maryland. Astle’s bill, repeatedly rewritten before its final passage, caps the tax at $15,000, meaning it would directly affect only owners of boats worth $300,000 or more.

Of course, the richer someone is, the easier it is for him to take his boat elsewhere. For instance, to Delaware and Rhode Island, which have no tax, or Virginia,which has a 2 percent tax with a $2,000 cap. Many in the maritime industry draw a direct line between the state’s exorbitant vessel excise tax and the failure of boat sales here to recover from the recession, even as other states are seeing a resurgence.

In fact, 2011 was the eighth consecutive year in which the state registered fewer boats than the year before. That year Maryland was No. 26 nationally in overall value of boat sales. “Do we really think the home of the Chesapeake Bay should be ranked in the bottom half of boat sales in the country?” boating expert Gary Jobson wrote last month.

Jobson also cited some industry rules of thumb: A boat owner spends 10 percent of his vessel’s value each year on maintenance and other work, and every six boats registered in the state generate one job in the maritime industry.

Also, the more boats are registered here, the more money should go into the Waterway Improvement Fund, which pays for dredging and other necessary projects. But the state Department of Natural Resources isn’t convinced. Testifying before a Senate committee in February against the earlier version of Astle’s bill, which had a $10,000 cap, DNR officials cited a University of Maryland study projecting that tax revenue from additional boat sales wouldn’t compensate for revenue lost because of the tax cap.

But late in the session House Speaker Michael E. Busch and others persuaded the DNR to back away from its opposition to the cap — because SB 90 had been rewritten to direct 0.5 percent of the state’s motor fuel tax revenue into the Waterway Improvement Fund.

The final version of the legislation also orders the DNR to do a yearly study of the effect of the tax cap. And it sets up a task force to report by Sept. 1, 2015, on the cap and ways to expand the boating industry. So if the tax cap doesn’t have the intended effect, the state — and legislators — will soon find out about it.

In the meantime, this new measure is worth trying.

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Friday, April 12, 2013 9:00 am.

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