Watercraft; raises sales and use tax. (SB1212)

Introduced By

Sen. Adam Ebbin (D-Alexandria)

Progress

Introduced
Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law

Description

Watercraft sales and use tax. Raises the rate of the watercraft sales and use tax, currently 2%, to 4.15%, which is the rate that will be applied to the motor vehicle sales and use tax effective July 1, 2016. The bill removes the current cap of $2,000 on the amount of watercraft sales and use tax that can be levied. The bill maintains the same amount of revenue to the Department of Game and Inland Fisheries. Amends § 58.1-1402, § 58.1-1410, of the Code of Virginia. Read the Bill »

Outcome

Bill Has Failed

History

DateAction
01/13/2015Prefiled and ordered printed; offered 01/14/15 15103102D
01/13/2015Referred to Committee on Finance
01/19/2015Impact statement from TAX (SB1212)
01/21/2015Passed by indefinitely in Finance (14-Y 0-N 1-A) (see vote tally)

Comments

Carolyn Norton Schmalenberger writes:

Please recognize the devastating consequences to local economies and the Commonwealth if this bill goes further than committee. As a local marina owner and boat sales business operator, we are just beginning to see some resurgence in sales after a very difficult past 8 years of depression. Increasing the Watercraft tax will bring boat sales to a screeching halt resulting in continued slow business and decreased revenue for the state.

• More than 3 out of 4-79% of current boat owners have an average income of less than $100,000. Sixty-two percent earn less than $75,000 per year. This is a middle class tax increase.
• Ninety-five percent of registered mechanically-propelled boats are less than 26' in length.
• Boaters are already paying significantly into the state coffers through the current sales tax on their boats, annual personal property tax, and a fuel tax, boat registration fee, and fishing license fee

Finally, one of the benefits and draw for many to purchase boats in VA is the "boat friendly watercraft tax." Increasing the tax will definitely send boaters to neighboring states such as NC where the cap on tax is $1,500. After all the money being invested in VA Tourism, an increased boat tax is counterproductive.

Buzz Brown writes:

We would appreciate your consideration on the devastating effects of more than doubling the taxes that are paid in the process of purchasing a boat in Virginia. This is a fragile industry at best that has been hit extremely hard during this past economic downturn. We are gradually seeing an increase in our sales to help bring our business back to profitability. Our business is over 40 years old and we have kept all of our employees through this downturn, but the effect of doubling our taxes could stop any of our chances of keeping full employment and a profitable business. We ask that you please consider if an increase is necessary, a smaller increase that will not have such a devastating effect on our business and many more. The number of dealerships in our Richmond area has dropped to less than half of the original dealers in the past 8 years. If this happens, that number could drop by more than half again.
Any industry or any entity that faced a doubling of their taxes would be dealt a crippling blow that would take years to recover from and the rippling effect of this would not be truly known until years to come. I feel as though this bill is a vote against Virginia, against job creation, and against small business. This is critical to us and our future depends on it. Please drop this bill from consideration in current form.

Terry Metcalf writes:

This is such Bullshit!!! The boating industry will be killed if this passes. It's not much different from the user tax that was passed some years back. How many boat manufactors went out of business because of that tax (A LOT). So let's pass a tax that only helps the people passing the tax and distroys Businesses and takes away jobs. People figure if you can afford a boat you can afford the tax. Wrong, they may be able to but won't because they don't want to give their money away. So the only loser here will be the boating industry and their suppliers and employees!! The boating business is been on a downward turn for the last few years. So let's hit them when they're down. Then you have tax on nothing!!

Martin Lucas writes:

Remember the repeal of the tax credits in the 90's.

Dozens of Yacht Builders and Airplane Manufacturers went out of business.

Putting tens of thousands of families out of work and on the welfare rolls.

How does that help?

Raising this tax will not increase revenues. It will do just the opposite.

Ernest M. Asaff writes:

As a marina owner in Middlesex County, I cannot overemphasize the damage to the industry in Virginia that SB1212 will cause. The effects will be immediate and felt throughout the state.
As you may know,the Virginia marine industry contributes over $1 billion statewide, generating over 8700 jobs and $68.9 million in taxes to the Commonwealth and local communities. The industry is still struggling to regain its footing from the Great Recession. This bill will cause irreparable damage in the form of revenues and jobs lost.
As noted in the post above, SB1212 constitutes a tax increase on Virginia's middle class.
There are over 260,000 boats in the state. More than 3 out of 4 or 79% of current boat owners have an average income of less than $100,000. Sixty-two percent earn less than $75,000 per year. Ninety-five percent of registered mechanically-propelled boats are less than 26' in length.
Boaters are already paying significantly into the state coffers through the current sales tax on their boats, annual personal property tax, and a fuel tax, boat registration fees, and fishing license fees.
Should SB1212 pass, the Virginia businesses that serve this industry will be severely impacted and we will lose revenues and jobs to neighboring states. Please reconsider.

John Phillips writes:

I am writing on behalf of the Virginia Marine Trades Association to request you remove SB1212 Watercraft Sales and Use Tax from consideration. It is deeply concerning that the proposed tax increase and removal of a protective cap could significantly harm boat sales in the state as well as all those additional industries involved in the manufacture, service and supply of products.

The approval of SB1212 could not only negatively impact the recreational boating industry in Virginia, but could drastically impact the thousands who work day in and day out to make a living on the water. The individual taxpayer who would be most impacted by SB1212 is not the large boat/yacht owner who can more easily afford an increased tax levy or to purchase and register in alternative states, but the working middle class who is already burdened with many additional taxes and fees to operate their boat.

I understand we have many benefits regarding motor craft and water safety as a result of the
Department of Game and Inland Fisheries’ efforts; however it seems there may be alternative methods to our education and outreach efforts that do not carry the drastic fiscal impact to all involved in the boating industry.

I hope you will consider the VMTA’s strong opposition to SB1212.

Thank you for your time and consideration of these stated concerns.

Christopher P Leigh writes:

As a Dealership Owner in Gloucester, I am extremely concerned how the approval of SB1212 will effect this states marine industry.
With over 50% of Purchaser's falling in the middle class bracket, this Bill will drastically impact their decisions on purchases. The added expense of owning a boat, such as Boat Sales Tax, Personal Property Tax, Registration Fees, Fishing License, Fuel, along with Repairs & Maintenance Costs, can easily reach 10-15% of the purchase price annually.
Boat owners currently pay a significant amount to the state to own a boat. Raising the tax or cap on sales tax would have a direct negative impact on Virginia businesses and their employees.
The marine industry has recently recovered from a long hardship and this increased tax/cap may decrease sales and therefore dissolve Virginia businesses and their employees jobs.
I respectfully ask that you reconsider and understand my opposition to SB1212.

Raynell Smith writes:

As a small business owner in Middlesex County dependent on boat owners for my trade, I see the passage of SB1212 as a death knell for me. Those wealthy enough to buy boats are mobile and will leave the state to avoid this huge increase in tax. Over the years I have watched a significant number of my customers take their boats from Middlesex to avoid the high personal property tax on their watercraft which the County refuses to do away with or even lower. Those who take their boats to neighboring counties-those with lower rates- do occasionally come back to Deltaville to shop but not in appreciable numbers. I expect that once a customer goes to a neighboring state to buy their boat they won't be so anxious to return to Virginia for services. Consequently, small shops like mine will suffer with all the other marine trade businesses. I urge you to consider the far ranging impact of this bill which, far from raising funds, will eventually result in a huge loss of revenue to the state.

Mary S. Yeaman writes:

I am writing to urge each of the committee members to vote against a raise in the Watercraft tax. My husband and I own a boat dealership in Danville, 20 minutes from the North Carolina state line. We are able to compete favorably with the North Carolina dealers because of our current tax structure. In an industry with increasingly negative news, this tax hike will hurt our ability to grow our business and add employees. Our industry was decimated in the recent recession. Prior to the downturn, there were 17 dealers in the Southwest Virginia Boat Dealers Assiciation. Now, there are SEVEN dealerships. At one point, 90% of the Marine industry was unemployed!!!! The recovery is too new and still too young to overcome additional obstacles. Small business is the backbone of our economy. Please don't make a decision to stifle our delicate industry in the Commonwealth. I believe that there are preconceived notions regarding the Boating industry. People may believe that the customer who is buying a boat is just "rich" and can certainly afford at few more dollars in tax. The reality is our customers are Seniors trying to take their grandchildren fishing or families who enjoy boating as a way to center their family. I implore the Finance Committee to vote against any measure that would harm such a fledgling part of our local economy.

Best regards,
Mary Yeaman

Editor’s Pick
Keith Ruse writes:

Ladies and Gentlemen,
Virginia State Senate bill, SB 1212, if passed, would put my 30 employees small business out of business. Our Middlesex marine industry is contributing around $54 million per year to our economy according to Virginia Institute of Marine Science study completed in 2011.
The marine industry contributes over $1 billion statewide, generating over 8700 jobs and $68.9 million in taxes to the Commonwealth and local communities.
There are over 260,000 boats in the state. Sales of boats in this state are over $335 million
More than 3 out of 4-79% of current boat owners have an average income of less than $100,000. Sixty-two percent earn less than $75,000 per year. This is a middle class tax increase.
Ninety-five percent of registered mechanically-propelled boats are less than 26' in length.
Boaters are already paying significantly into the state coffers through the current sales tax on their boats, annual personal property tax, and a fuel tax, boat registration fee, and fishing license fee .
Please consider these solid economic growth factors and do not pass SB 1212.

Ron McLean writes:

I have been in the boat business in Virginia for 36 years and I can tell you that this bill would be very detrimental to our industry and to Virginians as boat owners and potential boat owners. It may seem to "outsiders" that it will get more money from the "rich guys" but in reality it will do little and will result in becoming a barrier to new comers. Our industry is still really struggling to come out of the recession and it is very fragile at this time. Please don't make the mistake of voting to support this bill. It may cost me my livelihood.

Gregg Jay writes:

Generally, I'm against raising taxes on working class citizens. However, watercraft are pleasure use and not a necessity. If taxes have to be raised, watercraft, RVs and other recreational type vehicles seem to be a fair compromise if revenue cannot be generated from other sources.

Bruce Sanders writes:

I am a marina and boatyard owner in Lancaster County. Our customers are already paying personal property tax of 1.5% based on the full value of the boat every year. This tax is the highest on the Chesapeake Bay. Consequently the high value boats that normally require the most services that my boat yard provides leave for 6 months every year to avoid the tax. They will do the same thing for boat titling and registration if the tax is 4.15% of value. They will register out of state. Only the small boat owner will stay and pay the tax. This tax is aimed at the "rich" that the politicians think can most afford it. The "rich" will avoid it and the middle class will pay it. Give everyone a break. Leave the titling tax the same and eliminate the personal property tax on all boats state wide. You will see the marine economy in Virginia explode. Look at Rhode Island. They have a thriving "marine hub" economy. They also have no sales tax, no titling tax and no personal property tax on marine related businesses. Vote no to increase titling and use tax on boats.

Roger Cordle writes:

Counter productive for this industry. The decrease in sales will not increase the intended revenue as well as decrease the gross receipts needed for the municipalities. Furthermore, out of state consumers will have no reason whatsoever to purchase here in VA. What is the intention of a bill designed to cripple an industry?

Kim Harrison writes:

As manager of two personal watercraft dealerships in Northern Virginia I am asking that you please vote NO on this bill. The PWC industry was devastated in 2007 and is just beginning to see some recovery. This proposal will more than double the current tax which I believe is excessive. This will only further the problem of driving my customers to purchase and register elsewhere or not purchase at all. I strongly feel that you at least have a full study done prior to passing this bill.

David Brown writes:

I am co-owner/operator of a boat dealership in Middlesex since 1993 and have seen many ups and downs in the marine industry over the years. The proposed bill SB1212 will not only negatively impact the marine industry directly but many other businesses. In our small Chesapeake Bay community (where I operate) we (Virginia) are already loosing many current and potential new boaters due to tax issues. Simply walk the docks and count the empty slips. Our restaurants, motels, markets, convenience stores, tackle shops, etc... depend on the boating public and new boaters as much as we do. Keep cutting the supply and we all die on the vine. If we look at other states (like Florida) the realization for increased revenue from the recreational boatingfishing industries is well understood and managed. Virginia could do the same. Making Virginia's waterways more accessible and palatable would be a better strategy to help increase the states bottom line.