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By Dorie Cox
A bill to cap the state sales tax on yacht refits in Georgia has stalled in committee in the state senate. The bill, which made it through the Georgia House in mid-February, would cap state sales tax on parts and equipment during a refit worth $500,000.
Under House Bill 125, any parts, engines or equipment above $500,000 that a boat owner spends to repair, retrofit or maintain a boat, would be exempt from Georgia sales taxes. The current Georgia sales tax rate ranges from 7 to 8 percent, depending upon the county.
“Bringing more business into our state creates opportunities for everyone from florists to the local caulking business,” said Ernest Joseph D’Alto, president of Thunderbolt Marine in Savannah, Ga. “We would see growth from carpenters, electricians, mechanics and more. There’s a trickle down to restaurants, renters and drivers, and downtown Savannah will reap rewards with yacht crew here.”
Florida legislators passed a similar measure two years ago capping that state’s sales tax on repairs worth $1 million.
“We saw that it served Florida well,” D’Alto said. “Everybody’s goal here is to see the bill passed.”
The bill potentially “levels the playing field” for shipyard services between Georgia and Florida, said Ryan Chandler, vice president of business development at Colonial Group, the parent company of Savannah Yacht Center that is scheduled to open this summer. This legislation will encourage “significant private investment that is expected to lead to the creation of over 700 Georgia jobs,” he said by email.
“Vessels of this class have their choice of shipyards from anywhere on the U.S. Atlantic coast all the way to Europe,” Chandler said. “As it stands, Florida shipyards enjoy a tax exemption that makes Georgia uncompetitive. HB125 ensures that southeastern shipyards will be competing on the basis of quality facilities and services, not on tax treatment.”
Florida’s marine industry is paying attention. If Georgia’s proposed law passes, it would mean that refits half as large as those in Florida would benefit from a tax cap. For example, a $3 million refit in Florida would pay the state’s 6 percent sales tax only on the first $1 million, or $60,000. A $3 million refit in Savannah, if this bill passes, would pay 7 percent sales tax on the first $500,000, or $35,000.
“There is not a piece of legislation currently ready, but we have had conversations and are looking at that opportunity this year,” said Kelly Skidmore, public relations specialist with the Marine Industries Association of South Florida.
To organize new legislation requires working with members of the Florida legislature, the group’s lobbying firm and association members for public support, Skidmore said. Phil Purcell, CEO/president of MIASF, is at the Florida state capitol for several issues impacting South Florida this week and is expected to talk about gaining support to lower the Florida cap.
“It is a difficult year in the legislature, to say the least,” Skidmore said. “But we will work on this.”