Guarded Optimism for the Yachting Industry in Florida

Apr 9th 10
By Kelly Sanford

UPDATE: On May 28, 2010 Florida Governor Charlie Crist signed the Jobs for Florida bill into law. This bill contains the Florida Boat Sales-Use Tax Cap, which limits Florida sales tax, currently at six percent, on boat purchases or the use tax on currently owned boats to $18,000 – this will take effect on July 1, 2010.

 

 

Both FYBA (Florida Yacht Brokers Association) and MIASF (Marine Industries Association of South Florida) lobbied for this bill to be passed as Florida was losing revenue due to vessels leaving the state in favor of states and countries with less tax. The bill is expected to have immediate results, stimulating Florida’s marine industry.

 

 


 

APRIL 9, 2010: A Florida Tax Cap bill has been quietly gaining momentum in the Florida Legislature and on Tuesday, April 6 the House version of the bill passed by a large margin of 79-36.

According to The Florida Senate Bill Analysis and Fiscal Impact Statement, “The bill creates an $18,000 cap on the amount of sales and use tax that may be levied against each sale of a boat in Florida.” Some critics of the bill say it is just another tax cut for the rich, but what those critics fail to realize, is that at the current rate of six percent sales/use tax, a majority of yacht owners have elected to either register their boats in other states without onerous taxes or to simply register with a foreign flag of convenience which does not generate any tax revenue for Florida.

According to Danielle Butler, a maritime attorney and Partner with Fowler White Burnett in Fort Lauderdale, any boat, U.S. or foreign flagged, can now simply pay the $18,000 tax, register the boat in Florida and have the right to keep the boat in the state of Florida as long as they like. (Of course foreign flag vessels must still comply with any federal laws and the terms of their U.S. Cruising License.)

According to Frank Herhold with the Florida Marine Industries Association of South Florida, “The Sales Tax Cap, if approved by the Florida Legislature, will represent a huge 'welcome mat' encouraging vessels to stay in Florida after the purchase and make use of all that our marine industry has to offer in terms of outfitting, provisioning, refits, etc. Owners and captains will no longer have to be concerned with having to leave Florida to avoid unnecessary taxation resulting in loss of jobs and loss of sales tax revenues to the state. I would anticipate the Sales Tax Cap will serve as our marine industry economic stimulus package as we attract more vessel buyers, currently going to more tax-friendly jurisdictions, whose purchases will generate new jobs and new revenues.”

The proposal, loosely called “The Florida Maritime Full Employment Act” is also known as House Bill 711 and Senate Bill 2454. Having already passed the House, supporters of the bill are hoping to see it pass in the Senate before the session ends on April 30, 2010. According to Butler who has spent a great deal of time reviewing the bills and speaking with its sponsors’ legislative assistants (read: the guys who wrote the bill), “If the bill is not passed in uniformity by the time the 2010 sessions ends on April 30, then it dies and cannot be heard again until 2011.”

Needless to say there has been a great deal of nervous optimism regarding the passage of Senate Bill 2454 which still faces a number of hurdles to overcome before April 30. Herhold says, “The Florida Yacht Brokers Association and the Marine Industries Association of South Florida have joined together [in a joint effort] to pass this key piece of legislation to benefit Florida's marine industry,” just today Florida Governor Charlie Christ reiterated his approval of the bill and Herhold predicts, “It will pass as the Florida Legislature enters its final weeks!”

 

 





10 Comments
  • Charlie Crist was in Miami yesterday to sign the Red Light Camera law. Why did he not have a signing ceremoney with leaders in the Florida Yachting community is beyond me... especially when yesterday was the limit on the 15 day rule, for Governor's signiture. Is Chalie holding this up for political gain in his failed senatorial run?
    Posted by aeronautic1 19/05/2010 15:58:27

  • Well , this bill sounds like it will be a big welcome mat to boat owners. Which leads me to believe that there will be more boats in Florida and more jobs...Hummmm cant really see a down side to that.
    so if a special interest helps me get a job, well ....sorry Junior, but I'm all for it. by the way , you sound a tad spiteful, couldn't make it as a yacht broker?
    now that I think about it I never see Florida on the transom of a boat, may Junior works for the Cayman Ilsand or BVI's?
    Posted by aubree088 17/04/2010 03:00:58

  • Great that you are trying to stimulate the Florida Marine industry, but I hardly think fiddling with sales tax regimes will help. Sure, Florida yacht brokers will sell more yachts by cannibalizing clients from other states, but how does this benefit the marine industry. Yachts are not permanently fixed to the dock like shopping malls...yachts are mobile. If an owner was wise enough to take advantage of a tax break on Florida registration, he will also be wise enough the move his yacht out of state to seek cheaper maintenance. Are you going to force him to paint his superyacht in Florida ? or allow him to seek a better estimate north of the border.? Also Remember that in the US, Tax competition between states is discouraged. As I understand the laws if a customer purchases a yacht in Florida to take advantage of cheap registration he will be taxed on the difference when he moves his yacht to another state.

    In the case of Maine.... " The first time any owner of a watercraft registers the watercraft, the owner must (1) show proof that a 6% sales tax or use tax has been paid, or (2) pay the sales/use tax due to the Registration Agent at the time the registration is issued.
    Sales/use tax paid to another jurisdiction will be credited toward the Maine sales/use tax due "

    This implies that if the client paid 2 percent sales tax for a Florida flag, when he uses the yacht in Maine for a two month summer cruise with his family he will be required to pay 4 percent of the value to bring the yacht inline with Maine tax rules. http://www.heraldtribune.com/article/20091222/ARTICLE/912221034?Title=Boat-bought-in-Florida-but-Maine-levys-taxes
    Maine just profited 4 percent from the goofy tax break devised in Florida to benefit yacht brokers.
    I say penalize consumption with a fair sales tax then take these tax dollars and redirect them back into the Florida marine service sector to help companies invest in infrastruce improvements a
    Posted by junior_1 14/04/2010 08:49:39

  • here's to hoping more American flag registered yachts and more American yachties and axillary positions as well. let's hope to change the illegal gainful employment influx that has increased due to high taxes over registration. at least, it has been one reason why...
    Posted by runningoutofusernameideas 13/04/2010 19:20:36

  • Junior,
    Why do you consider this number inaccurate? The direct and indirect jobs produced by one mega yacht getting work done in a yard is easily 130 if not more.
    As far as "Florida's marine industry being hampered by high property taxes, high property acquisition cost, high property insurance premiums and high labor costs" - what has that got to do with sales tax? I think you misunderstood the article. At the moment these yachts don’t pay ANY tax to the state of Florida because they go offshore to avoid paying 6%. If the Florida legislature caps the tax at $18,000 (the average cost of setting up an offshore company to perform the necessary paperwork etc.)the buyers of these mega yachts will stop doing this. Therefore the boats stay in Florida, get work done in Florida, keep everyone in the marine industry (Broward counties largest industry) busy - and ultimately help the yards pay their taxes, acquisition costs (BTW Florida's property acquisition costs are the lowest they have been in 15 years) & insurance premiums.
    While I don't believe "the sole reason for a yacht owner to Flag the yacht Cayman Island is to avoid the Florida state sales tax" I do believe it is the main reason. Its simple maths. If you are buying a $10M yacht and you have the choice of paying $600,000 in taxes to the state of Florida or paying $18,000 to $20,000 to the Cayman Islands what would you do?
    I tried to open your link to read but it would not open.
    Finally Junior, I am not trying to scare you - I'm just trying to get the marine industry of South Florida behind this - and keep my job. It's a no brainer and I'm baffled by the resistance.
    Posted by Crew4Yachts.net 13/04/2010 18:04:24

  • Here is hoping the State of Florida has the sense to get this bill passed. This will be a winfall for the state. As we all know anybody who buys a yacht over $1 million does so with an offshore registry. Ever see a big yacht that has a home port of Fort Lauderdale or Miami? No, they all say Cayman Islands or BVI, etc. The state currently gets zero dollars from these yachts. Offshore registered boat have to deal with certain boating restrictions but the yacht owners deal with those restrictions rather than pay the sales tax. If this bill passes most yacht owners will register thier yachts in Florida giving the state the added revenue.

    The loss of one such yacht to another state or country for this work is the loss of over 130 jobs. This doesn't include the indirect jobs created. It's not a trickle down effect - it's like turning on a fire hose.
    Posted by Crew4Yachts.net 12/04/2010 21:40:51

  • Nothing wrong with that. But its a shame that as an Owner with the Internet you cant put forward a more coherent strategy to encourage savings and investment for the future, while reducing consumption to sustainable levels.
    Posted by junior_1 12/04/2010 09:56:26

  • " The loss of one such yacht to another state or country for this work is the loss of over 130 jobs" Are you serious ???? 130 JOBS ! This is scare mongering..... are you an industry lobbyist ?
    Florida's marine industry is hampered by high property taxes, high property acquisition cost,, high property insurance premiums and high labor costs. Lowering the sales tax on yachts does nothing to address these problems. Read the report. http://www.oppaga.state.fl.us/reports/pdf/0748rpt.

    Additionally ,If you believe that the sole reason for a yacht owner to Flag the yacht Cayman Island is to avoid the Florida state sales tax you are poorly informed.
    Posted by junior_1 13/04/2010 13:06:40

  • Its fool hardy to allow special interest yacht brokers to influence the revenue gathering strategy of a society. This tax cap is a classic " consumption " stimulus. The US has already tilted its society towards "super size it" consumption and created a nation of sales staff . This orgy of consumption, financed with debt, is what caused the financial mess in the first place. . If Florida truly wanted to stimulate the yacht service, yacht construction industry and create worthwhile non sales jobs, it would recommend that Yacht Brokers and charter agents voluntarily "cap" their sales commission at 18,000 dollars then devise tax relief strategies and infrastructure improvements to benefit and lower the operating overhead of the marine service industry . These value adding marine business's employ thousands of local taxpaying workers, export services, source their company pickup trucks in Detroit rather than Stuttgart and keep the US trade deficit down
    Posted by junior_1 11/04/2010 22:06:02

  • Maybe the state of Florida ought to start cracking down on yacht captains who like to enjoy the benefits of US status yet do everything they can not contribute any of their generous income towards taxes.
    Posted by Owners Have Internet too_2 12/04/2010 02:53:03

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