State hopes boat tax cut will have rip­ple ef­fect

State hopes to re­verse de­clin­ing sales

Stamford Advocate (Sunday) - - Front Page - By Alexan­der Soule

As Hinck­ley Yachts Gen­eral Man­ager Peter Man­ion low­ered a power­boat into Stam­ford Har­bor on Wed­nes­day morn­ing at the Maine man­u­fac­turer’s new boat­yard, he took a mo­ment to re­flect on Con­necti­cut’s move this month to cut taxes by more than half on new boat pur­chases.

Hinck­ley is hir­ing in Stam­ford ei­ther way, but Man­ion says a ris­ing tide of boat sales can only help things.

Start­ing in July, Con­necti­cut deal­ers will charge a 2.99 per­cent tax on the sales of boats, en­gines and trail­ers to trans­port them, down from the state’s stan­dard 6.35 per­cent tax, and with boats sold for $100,000 or more hav­ing pre­vi­ously hav­ing been sub­ject to a 7.75 per­cent levy.

Boat deal­ers and re­lated in­dus­tries had spent years ar­gu­ing for the tax to be low­ered, say­ing many buy­ers sim­ply bought and berthed boats in neigh­bor­ing Rhode Is­land and New York, cost­ing them both sales com­mis­sions and rev­enue from ser­vices they pro­vide dur­ing boat­ing sea­son.

The Gen­eral Assem­bly and Gov. Dan­nel P. Mal­loy fi­nally reached con­cur­rence this month, adding the tax break de­spite at­tach­ing a fis­cal note that it could cost the state $2.3 mil­lion in rev­enue. Many in the in­dus­try be­lieve that deficit will be more than made up by ex­tra sales gen­er­ated in Con­necti­cut, as well as an­cil­lary rev­enue from ser­vices pro­vided by boat­yards.

As a small con­ces­sion in a big bud­get, the new tax has yet to get wide no­tice, but boat deal­er­ships and bro­kers from Green­wich to Ston­ing­ton are hope­ful it will have a rip­ple ef­fect start­ing in July.

“We’re not get­ting a lot of feed­back on it yet,” said Rick Delfosse, busi­ness man­ager with Rex Ma­rine in South Nor­walk. “It comes out as a net pos­i­tive, be­cause (buy­ers) don’t pay the sales tax, but they pay taxes on stor­age, fuel and other ser­vices.”

‘Boom­ing with boats’

Tes­ti­fy­ing in Fe­bru­ary in sup­port of a tax cut, the head of the Con­necti­cut Ma­rine Trades As­so­ci­a­tion said 1,125 boats were sold in Con­necti­cut last year, about 1,900 fewer than a decade prior. Last year, there were 2,300 fewer boats reg­is­tered in Con­necti­cut, with rev­enue down 9 per­cent.

“This is not about the rich,”

said Kath­leen Burns, ex­ec­u­tive di­rec­tor of CMTA, which from its Es­sex of­fice counts a mem­ber­ship base of more than 330 mari­nas, deal­ers, re­tail­ers and other en­ti­ties. “Only 10 of those boats were larger than 40 feet, (and) 574 were un­der 20 feet. In the North­east, we are now the only state (that) lost boat reg­is­tra­tions and saw de­clin­ing sales — the only one. It’s got to stop.”

Tax con­sid­er­a­tions of­ten come up in pur­chase dis­cus­sions, ac­cord­ing to John Her­rmann, a For­mula re­gional sales rep­re­sen­ta­tive at the In­di­ana-based boat man­u­fac­turer’s show­room at Rex Ma­rine — sel­dom as a deal breaker but cer­tainly in the con­text of buy­ers look­ing for sav­ings on a ma­jor pur­chase.

“It’s a big deal,” Her­rmann said of Con­necti­cut’s re­vised tax rate. “It’s not a half-point you are talking about here.”

Delfosse said his daugh­ter is able to draw reg­u­lar com­par­isons be­tween the ma­rine in­dus­tries in Con­necti­cut and Rhode Is­land, where she works in the ma­rine in­dus­try in New­port.

“Peo­ple are go­ing else­where,” he said. “You go up to New­port, the har­bor is boom­ing with boats.”

Rex Ma­rine is among the mari­nas that have cre­ated a boat­ing club as a way to boost in­ter­est, with some 200 mem­bers avail­ing them­selves of 10 power­boats that can be re­served via a mo­bile app. The early re­turns have been en­cour­ag­ing, with Delfosse in­ter­ested to see whether Con­necti­cut’s new tax rate will boost in­ter­est fur­ther.

“We’ve had two or three peo­ple leave the boat­ing club to buy a boat,” Delfosse said. “The big­ger boats are sell­ing, but not a lot of mil­len­ni­als are com­ing into the mar­ket­place, and that’s what we are push­ing — to try to get the mil­len­ni­als in.”

Back in Stam­ford on Wed­nes­day, a boat owner hollered in Man­ion’s di­rec­tion from the fu­el­ing dock to in­quire whether any dis­count was to be had by pay­ing cash rather than credit. Whether top­ping off a tank for $500 or lay­ing down $500,000 for a new yacht, for boaters price is al­ways a con­sid­er­a­tion — and the price of a yacht sold in Con­necti­cut is about to get con­sid­er­ably cheaper.

“Ev­ery­one wants a deal,” Man­ion said.

Alexan­der Soule / Hearst Con­necti­cut Me­dia

As Terry Mur­phy looks on, Peter Man­ion low­ers the Mur­phy fam­ily’s power boat Run­ning Bear into Stam­ford Har­bor on Wed­nes­day at Hinck­ley’s new boat­yard on Sel­leck Street.

Alexan­der Soule / Hearst Con­necti­cut Me­dia

The new Hinck­ley Yachts boat­yard on Sel­leck Street in Stam­ford. As of July, Con­necti­cut is cut­ting sales tax on boat and en­gine pur­chases by half to 3 per­cent in a bid to boost busi­ness that deal­ers have lost in the past sev­eral years to Rhode Is­land and New York.

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