Boating Industry Organizes To Roll Back The Luxury Tax

Pac Says Surcharge Has Caused Layoffs

June 03, 1991

Boating enthusiasts who hope to repeal a federal luxury tax on new boats have formed a non-affiliated political action committee, the first for the struggling industry.

Mick Blackistone, director of the Annapolis-based Marine Trades Association of Maryland, has enlisted 30 state marine trades associations and boat manufacturers and dealersto help overturn a 10 percent tax on new boats costing more than $100,000.

The tax, part of a five-year federal deficit-reduction package, already has cost the state jobs, businesses and income generated by sales and income tax, said Blackistone, the Save Jobs in Boating PAC's volunteer chairman.

A Marine Trades survey of large-boat dealers shows first-quarter boat sales this year were down as much as 90 percent and employment in the industry declined as much as 40 to 50 percent.

"The most devastating thing to hit the industry in a long time has been the federal luxury tax," said Blackistone. "If it is not repealed, we will lose a significant number of boat dealerships and ancillary jobs in the industry within the next year."

In Anne Arundel County, some 7,000 people work in marine-related jobs, he said.

Boat dealers in Annapolis and surrounding areas have seen sharp declines in sales of new large boats. Plummeting sales have forced some dealers to lay off employees, Blackistone said.

Since the tax took effect in January, almost no one has bought boats of more than $150,000 from Shady Oaks Marina in West River, which relied on those sales. Owner Tom Frank said he has had to lay off nearly half of his employeesand rechannel his business into used or less expensive boats.

Thetax, which also applies to certain values of luxury cars, jewelry, fur coats and private aircraft, unfairly targets the boating industry and boating enthusiasts, Frank said.

"These consumers are not the Kennedys or the Rockefellers,"he said. "They're self-made businessmenwho've worked all their lives and elected to use their disposable income on boating as oppose to a condo in Ocean City or vacations to Europe.

"We've been discriminated against as an industry," he said. "It's an American industry that our Congress is putting out of business. They haven't taxed Toyotas or Sony TVs. They put a tax on our ownindustry that doesn't have a large lobbying effort."

While individual marine associations have their own PACs, boating interests have never united to contribute to political campaigns, Blackistone said. Marine trades have lacked the political clout of industries like trucking, restaurants and medicine.

So far, Save Jobs in Boating has raised several thousand dollars and expects to collect at least $500,000, Blackistone said. Several large-boat manufacturers, many of whom have had to lay off workers, have expressed interest in supporting the PAC.

Unlike PACs for the National Marine Manufacturers Association and the Marine Retailers Association of America, which can take only their members' contributions, the newly formed PAC can solicit personal, non-business contributions from boat owners, marine business owners and marine trades employees.

Members of Maryland's congressional delegation, including U.S. Representatives Wayne T. Gilchrest, Tom McMillen and Helen Delich Bentley and Sen.Barbara A. Mikulski, have agreed to sponsor legislation to repeal the tax.

Through new taxes and fees, the federal government expects recreational boaters to generate at least $150 million. Annual user fees, ranging from $25 to $100 on boats longer than 16 feet, will raise $130 million, while theluxury tax will raise $20 million, government estimates show.

ButBlackistone expects the tax to collect less than $3 million the first year, and cost millions more in income tax and unemployment. The industry estimates that marine trades across the country will lose 20,000 jobs.

At Shady Oaks Marina alone, the state has lost $300,000 that a 5 percent excise tax would have brought in, Frank said. The dealer no longer can sell the $500,000 boats that were offered prior to the luxury tax, he said.

Dealers in Maryland generated $278 million in boat sales in 1989. Blackistone predicted a much lower figure bythe end of 1991.

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