Political armada forming to sink tax on yachts Boaters say new tax and user fees hit them broadside, harm industry.

May 28, 1991|By Stacey Evers | Stacey Evers,States News Service

WASHINGTON -- To combat what they say was an attack by Congress on a defenseless industry, boat users, manufacturers and dealers are forming a federal political action committee to fight back.

"Necessity is the mother of invention," said Robert McCoid of the National Marine Manufacturers Association. " We're pulling all the stops out to raise the visibility of the boating industry on Capitol Hill."

Boaters believe that Congress hit them unfairly last fall as it struggled with the federal budget. Congress levied a boat-user tax ranging from $25 to $100, depending on the size of the boat, and a 10 percent excise tax on yachts costing $100,000 or more. The Coast Guard is still working out a plan to collect the user fee. The excise tax took effect in January.

"We were singled out for two different things. That's apparently because we're not highly regarded in Washington," said Norm Schultz, the executive director of Boating Associations of Ohio. "But we're going to be regarded because we don't want it to happen again."

After comparing their political muscle to those of hunters and sportsmen, restaurateurs and truckers, leaders "recognized that the boating industry has not had deep pockets when it comes to political action," said Mick Blackistone, executive director of Marine Trades Association of Maryland. While some political action committees work with millions of dollars, the boaters have "far less" than $100,000, Blackistone said.

And so they decided to form the Save Jobs in Boating PAC and will register it soon with the Federal Election Commission.

Blackistone, the newly appointed chairman of the PAC, said donations will be collected from boat builders, dealers, corporations, boat users -- anyone who wants to give.

Initially, Save Jobs in Boating's primary focus will be to defeat the excise tax on yachts. Opponents of the tax, in the marine industry as well as Congress, say the duty will raise little compared to what will be lost in income and sales tax from accessory sales and tourism.

"The luxury tax is probably the most devastating issue that has come down the pike to confront the industry head-on in a long time," Blackistone said. "The marine industry consists of small businesses and most of those are, unfortunately, poorly capitalized so when something like this happens to you, you're hanging by your teeth."

Rep. Helen Delich Bentley, R-2nd, a member of the House Merchants Marine Committee, is co-sponsoring a bill to repeal the excise tax. Bentley agrees that the tax doesn't generate much revenue for the government but does adversely affect the marine industry.

"It will cause a lot of problems with boat builders," Bentley said. "A lot of businesses have been very hard hit."

"Whether it's a yacht, deluxe corporate jet or a real fancy Mercedes, that kind of luxury tax is appropriate," he said.

But Blackistone maintains that the luxury tax falls short of its mark, taking jobs from the poor and middle class instead of placing a fair share of the tax load on the shoulders of high-income earners.

"One of the issues everyone has to recognize is that when you're dealing with boats, you're dealing with discretionary dollars," he said. "Nobody has to have a boat regardless of their income. If they choose not to spend on that, they won't. And that is what has happened."

Since the excise tax took effect, yacht sales have declined by 40 percent nationwide, Blackistone said, and Maryland is "running close to the national average."

Schultz, the executive vice president of Lake Erie Marine Trades Association, agreed that the first five months of the tax has had a "devastating" effect on large-boat sales.

WK In a first-quarter survey of 14 major large-boat dealers in northern Ohio, only six boats costing $100,000 or more were sold, compared with an average of 46 such sales in previous years, he said.

Of course, industry officials say, the recession has taken some of the wind out of their sales. But, they say, times are tough enough without an additional 10 percent fee on boats.

To tax the rich "is good political posturing, but it won't raise the money they think it will," Schultz said. "It's pushing people out of work in the major boat plants. If that's good public policy, then something's wrong."

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