State House reverses yacht vote
After appearing to kill a bill to give tax breaks to yacht buyers, the Texas House had a change of heart Friday and revoted to keep it alive.
The House voted 74 to 68 to kill the proposal that would have capped sales taxes on yachts as large as 115 feet at $18,750. That would reduce sales taxes by more than $60,000 on a $1 million boat.
But three hours later, the House announced it was taking the unusual step of reconsidering the defeated bill and voted 82 to 55 to pass the tax cut after all. House Bill 4032 had already passed the Senate 25 to 6. With the identical bills passing both chambers, it now goes to Gov. Greg Abbott.
State Rep. Ryan Guillen, DRio Grande City, said he knows critics see the bill as a tax break for yacht buyers, but the real goal is to boost the state’s sagging boating industry. He said since 2010 when Florida capped sales taxes on boats at $18,000, the Texas boating industry has suffered. He said people are buying their big boats in other states and docking them there, helping those states take business away from the Texas coast.
U.S. Coast Guard data shows the number of total boat registrations in Texas dropped from 2016 to 2017 by about 10,000 registrations to 565,000. That is 6th most in the nation. Florida has the most registrations with 918,000.
Guillen said wealthy boat buyers are going to get their tax break anyhow by going to other states. He said Texas needs to provide a similar break to give buyers incentives to purchase in Texas instead and create jobs here.
The Texas Marine Industry Coalition has told legislators the bill is about saving maritime jobs. The bill would result in Texas losing over $2.3 million in sales tax over the next two years, but Guillen said the resulting jobs created would benefit the state more.
Currently, boats in Texas are subject to a 6.25 percent state sales tax plus local sales taxes which could be up to another 2 percent. At 8.25 percent, sales tax on a $3 million purchase amounts to $247,500 in sales taxes. But under Guillen’s proposal, that tax bill would drop to $18,750.