A repeat effort to cap sales tax on yachts sold in Texas at roughly $25,000 is not gaining ground in a state legislature concerned about billions in predicted budgetary shortfalls.
The bill by Sen. Larry Taylor, R-Friendswood, remains in committee. Supporters say the bill would make Texas yacht sales competitive with Florida and Maryland, two states that have placed similar caps on such sales and which have reportedly seen sales taxes rise as owners purchase fuel, goods and services to support the boats.
The bill was originally introduced in 2011 by State Rep. John Davis, R-Houston. It made it out of committee, but died in the vote.
In Texas currently, all boat sales are subject to a 6.25 percent sales tax based on prices paid.
Jamie Babcock, a broker with Sea Lake Yacht Sales in League City, Texas, said his company loses sales daily to friendlier financial waters in Florida.
“We can’t compete with what’s going on in Florida and once we lose owners to Florida, they never come back to Texas,” Babcock said. “The sales tax are one-time gains and having no relief from 6.25 percent tax is hurting the long term gains of taxes paid on fuel, food, maintenance…all the things that come from jobs created to support the local yachting, boating and fishing industry here in Texas.”
Randy Bright, sales manager for Galati Yachts in Galveston, said, “If you just put aside all the rhetoric about tax breaks for the rich what you’d see is yacht sales bring with them jobs that support the local economy.
“Because we lose sales to out-of-state brokers due to the fact we have to charge 6.25 percent sales tax, we can’t open a service department, which would generate taxes and create jobs,” Bright said.
Seabrook Shipyard, one of the largest facilities of its type on Galveston Bay, services 1,000 boats of all types each year.
“A cap on the sales tax would undoubtedly increase the size of the local fleet and I’m sure we’d see more boats coming in for service as well as a rise in slip rentals,” said Linda Dimitropoulos, shipyard manager. “The fleet isn’t getting any larger as a lot of sales are done out of state and those boats don’t come here.”
A spokeswoman for Taylor said the senator was withholding comment since the bill was making slow progress in subcommittee, but Taylor told The Houston Chronicle, the bill “is not about giving tax breaks to the rich. It is about jobs and protecting our Texas economy.”
Calls and e-mails to Davis, R-Houston, who is again sponsoring a companion bill in the House, were not returned.
Bob Howie is assistant chief pilot with Wing Aviation Charter Services in Houston, Texas. He spent 13 years as a writer with the Houston Chronicle, and is a lifelong boat owner. Comments are welcome at email@example.com.