Last month Sen. John Kerry of Massachusetts was derided nationwide for registering his new boat in the tiny-and-thriving boat tax haven of Rhode Island. Many presume that the Senator’s intent was to avoid the significant sales and boat excise taxes that Massachusetts imposes on its registered boaters.
Political damage control has since been practiced to the tune of $500,000 in sales tax and $70,000 in boat excise tax payments to Commonwealth coffers on the Senator’s $7 million vessel (with the Senator maintaining the taxes were intended to be paid all along). The story illustrates a short-sighted lack of judgment, but on whose part?
Thousands of men and women of the Massachusetts recreational marine trades are struggling statewide to stay afloat in a burdensome tax environment in a down economy. Massachusetts boat tax policy is the gift that keeps giving to out-of-state beneficiaries, sending jobs to tax-free Rhode Island, New Hampshire, and more recently Maine, with its reduction of its sales or use tax rate to 2 percent for non-residents who register their boats there.
If John Kerry weren’t a U.S. Senator, would we have even noticed that his primary residence and boat were registered in different states? Could anyone really be blamed for registering a boat “Anywhere But Here”?
Sandwiched between tax-free havens to the north and south, fewer and fewer boats are being built in, bought in, registered in and docked in Massachusetts, reducing the overall demand for marine trade employees statewide. Changing the Commonwealth’s boat tax policy is about jobs, not creating a tax haven for affluent recreationalists.
Massachusetts must adopt its own competitive boat tax policy. Reasonable, incremental efforts to do so have been made for years but have never advanced beyond the compulsory legislative committee stage. For nearly a decade the Massachusetts Marine Trades Association has actively supported legislation to make boats built or rebuilt in-state tax-free.
This narrowly written bill would preserve in-state boatbuilding and repairing jobs — consider that Sen. Kerry’s $7 million yacht was built in New Zealand, and he maintains that the initial Rhode Island registration was based on location for repair work — yet it has never been given serious consideration, and the bill’s sponsor has retired. Indeed, just this past weekend Massachusetts residents enjoyed a tax-free weekend, yet boats were expressly excluded in the enabling legislation.
Rhode Island’s 1993 boat sales tax repeal increased its marine industry employment by 20 percent within two years, and within five years gross revenues in the Rhode Island marine industry grew by 52 percent. This type of forward thinking promotes long-term gain sans the short-term pain — after all, the New England boating season is short; for a better part of the year most people aren’t thinking about boat buying, thereby eliminating boat taxes as a consistent state budget booster.
If the Massachusetts legislature and governor supported boat tax policy similar to our neighbors, there would be little to be lost but much to be gained. Those who have already purchased and registered their boats in the Commonwealth aren’t going to chart a new course for another heavy boat tax state in protest! Indeed, many Massachusetts boaters might even take the opportunity to buy new boats in-state, providing a desperately needed boost to all things boating, including dealers, brokers, builders, repairers, technicians and increasingly specialized electricians, fiberglass workers and vessel outfitters.
The best part of a boat tax friendly Massachusetts? Jobs! But not just for the boating industry. The elimination of state boat taxes would be offset by the influx of new boaters spending their money on Massachusetts goods and services as well as the employment tax revenues. It has been documented in a 2006 study by Michigan State University that spending by transient boaters at Boston’s Constitution Marina supported 30 direct and indirect seasonal or year-round jobs. The more boats built, purchased and registered in Massachusetts, the more direct job growth within the marine industry, but also indirectly at restaurants, hotels, gas stations and grocery stores.
We are fortunate in Massachusetts to have a committed Legislative Boating Caucus. Its 50-plus members show up and follow up. Its collective, non-partisan voice has accomplished much in just over five years, including opening the Boston Convention and Exhibition Center to gate shows and streamlining the outdated abandoned vessel disposal process.
The Gate Show Bill faced powerful union and neighborhood opposition; prior approaches to handling abandoned vessels languished for years. The Boating Caucus prioritized each and got each passed. Today the BCEC’s annual winter boat show keeps the Business of Boating in Massachusetts afloat. Today Massachusetts marinas and boatyards are able to dispose of abandoned vessels without seeing the inside of a court room. With the political will comes the way.
Boasting more than 1,500 miles of saltwater coastline and more than 2,500 square miles of inland waters, Massachusetts possesses the “infrastructure” to rebuild its historic marine industry and recapture a boating population that is increasingly setting sail for tax-friendlier waters. If the recent popular vote for U.S. Senate is any gauge, ordinary voters seem to understand tax policy affects ordinary jobs. Again, all that is needed is the political will to navigate the way toward long overdue necessary changes to Massachusetts boat tax policy.
— Jack Kent III
President, Massachusetts Marine Trades Association