Key Issues

The repeal of the sales tax exemption, the luxury tax and addition of a municipal personal property tax will devastate the state's marine trade's industry which is just now beginning to recover from the recession. These proposals will not provide the state with the long term financial gain it expects.

• In Connecticut there are sales taxes on boating: On a boat 6% when it is sold, 6% for all parts and accessories purchased, 6% on wet or dry summer storage, 6% on freight, and 6% on a summer slip or mooring. There is a 6% use tax on any vessel purchased by a Connecticut resident out-of-state and returned here for registration less any taxes paid elsewhere. With no sales tax on boating in Rhode Island frequently sales are lost to dealers in that state because of the differential.

• A tax exemption on winter storage fees (wet or dry) for vessels (1983) has encouraged out-of-state vessels to off-season store in Connecticut at a competitive price. Elimination of this exemption would recoup approximately $400,000 in tax dollars but in reality it will chase away $10’s of millions in repair invoicing for maintenance work, upgrades, repowering, refinishing and general revamping during the annual winter work period. Easily causing the loss of several million dollars in direct sales tax revenue, a severe unintended consequence that must be considered by legislators.

• A tax exemption on repair and maintenance labor encourages out of state and instate vessels to have their off season service work with Connecticut boatyards and also have any necessary upgrades or overhauls done here, thereby maintaining a Connecticut employment base and jobs. The industry saw a 30% increase in business within 18 months of instituting the exemptions in 1999 proving its value. This allowed for jobs in the industry with employee health coverage and various employee benefits, pensions, paying rents and leases and allowed waterfront property owners to invest over $40 million in their businesses and properties over the years.

• The major tax exemption that the marine industry truly needs is the exemption of sales tax on a trade-in vehicle (like item for like item). This long standing exemption just barely allows competition with our neighbor state to the East, Rhode Island, again where there is no sales tax on boating. It is very difficult to compete with a state that begins with a 6% fiscal advantage as well as lower energy costs and lower labor rates. Rhode Island’s large boat building industry has gained recognition from their legislature that what’s good for boating is also good for the economy of the state by creating and maintaining jobs and business.

• Another exemption is crucial to bringing outside winter business from other states to CT. There is an exemption from use tax on vessels registered elsewhere and are deliberately brought to Connecticut for winter repair, storage, and maintenance work from November to April. Providing they are not being recreationally used here, DRS will not subject them to use tax scrutiny. Connecticut enjoys some well-respected shipyards that generate significant business and sales tax from this winter work.

• Allowing municipalities to impose personal property tax on a vessel which provides no funding for the state budget. The property tax is planned to go to the vessel owner’s town of residence, most of which have no boating facilities or services. This will ensure that Connecticut boaters will pay the highest fees in the country and receive little or no services for their expenses.

• Tax exemptions for winter storage and labor charges in Connecticut’s marine industry were never “gifts” as represented by some in the media, they were business tools that allow survival and competition with similar industries in surrounding states where there are no sales taxes and lower energy and labor costs. Losing any of them will tip the scales and severely damage the local industry.