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Why Taxes On Yachts Should Be Capped

Sales tax on yachts generates quite a bit of revenue each year for coastal states. These taxes are collected on the sale of new and used yachts and can add a significant amount of money to the price of the yacht. At first thought, one might see the additional revenue a good choice for the state, however the ramifications of adding fees to an already costly purchase may be a mistake for the citizens.

Placing a cap on the taxes a purchaser will pay for a yacht, will help to increase yacht sales. When the entire amount of the sales price is taxed the purchaser has an incentive to purchase and store their yacht offshore or in neighboring states. This then reduces the number of yacht sales and money going to the local economy.

Local Income

When yacht owners purchase and store their yachts in other areas, they are more likely to vacation in that general area. This reduces revenue that would have been generated through tourism. When tourism revenue declines, politicians will soon look to the local citizens to make up the tax difference through property or additional sales taxes. Capping the amount of tax on the sale of yachts will improve the local economy through increased tourism.

The more yacht buyers have to pay in taxes, the less they will spend in the local market. This reduces jobs in the area and negatively impacts the local economy. The amount of jobs created by the yachting industry, especially yachts considered "high end", are numerous-- yacht builders, berthers, maintenance workers, restaurants, stores, cleaning crews, etc. By providing a cap on taxes for yachts, the purchaser’s money will go to jobs that provide pay checks directly to the people of the local economy. This puts the citizens in control of their own lives rather than putting the money in the hands of the government to spend on behalf of the citizens.

Discouraging To New Owners

When a yacht is sold for the first time, it is taxed as a new purchase. When the private owner of that same yacht decides to sell it, the government collects a sales tax again from the new buyer. In general, purchasers of used yachts have budgets. When the buyer looks at their budget, they have to consider the amount of taxes and fees associated with the cost of the vessel. This reduces the amount of principal they can pay a seller for the yacht, thereby reducing the money that goes back into the local economy.

For these reasons, capping the amount of tax paid on a yacht will help to increase revenue by increasing the quantity of yachts sold, stored, built and maintained in the area.

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