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Christie’s Proposed Bill Could Deliver Even Bigger Tax Breaks to NJ Boat Buyers

Governor says halving sales-and-use tax will let middle class savor the pleasures of boating. Critics say he’s all wet


When the state Senate returns to Trenton for a voting session later this month it will consider a proposal that could end up providing a big tax break to those planning to buy a boat in New Jersey.

The vote will be the latest step in an ongoing effort to boost boat sales that began earlier this year when lawmakers sent Gov. Chris Christie a bill seeking to cap the sales and use tax levied on yachts and other pricey boats purchased in New Jersey at $20,000.

Christie, a second-term Republican now seeking the GOP’s 2016 presidential nomination, responded last month with his own proposal, a pitch to lower the tax rate on all boats sold in New Jersey by 50 percent.

Now, the Democratic sponsors of the original bill say they’re open to the changes that were made by Christie in the form of a conditional veto, and the Senate is planning to vote on the governor’s version of the legislation during a session that’s scheduled to be held on September 24, Trish Graber, a spokeswoman for the Senate Democratic Majority, said yesterday.

When the bill was first introduced, its sponsors, Sens. Jeff Van Drew (D-Cape May) and Jim Whelan (D-Atlantic), said the measure was intended to both stimulate a state boating and marina industry that’s still struggling to recover from 2012’s superstorm Sandy and to put New Jersey back on a competitive footing with other states that have made aggressive tax-policy changes in recent years.

In Florida, for example, the sales taxes paid on boat purchases can total no more than $18,000. And new tax incentives in New York are now being offered to anyone buying a boat worth more than $230,000 under the budget Gov. Andrew Cuomo signed into law earlier this year.

But the sales-tax cap legislation has also drawn criticism from liberal groups in New Jersey who argue it would provide a tax break for only the very rich. Doing the math on the proposed $20,000 tax cap, the change would only apply to boats costing roughly $286,000 or more. And those buying yachts worth more than $1 million would see a projected $50,000 in savings.

Still, the measure received widespread support from lawmakers from parties in New Jersey and was easily passed by both the state Senate and Assembly in late June. Christie, in his conditional veto issued last month, praised the sponsors for the intent of their bill. But he also said the approach of cutting taxes should be taken a step further.

The conditional veto proposed lowering the tax rate on boat purchases by 50 percent, in addition to capping the maximum amount that can be paid at $20,000. Right now, the state levies a standard 7 percent sales-and-use tax on boats sold in New Jersey. It would drop to 3.5 percent under Christie’s proposal.

“Lowering taxes on New Jersey residents and supporting the continued economic growth of our shore communities following the impact of superstorm Sandy are laudable goals,” Christie wrote in the conditional veto. “However, I do not believe this bill goes far enough in accomplishing these goals.”

“It provides no relief to other individuals, including middle-class citizens, who purchase smaller boats,” he wrote.

Legislative analysts have estimated the state collects about $10.5 million in annual revenue from boat sales, and they determined the original version of the bill would likely cost the state between $1 million and $2 million in lost revenue. They also said the state could conceivably collect more revenue if the cap encourages more higher-priced boat sales.

But it’s unclear how much Christie’s proposed change would further impact the state budget.

New Jersey Policy Perspective, a liberal think tank based in Trenton, said the new version of the bill could cost up to $5 million and would still provide the largest benefits to the wealthy.

In the wake of Christie’s conditional veto, Van Drew said the governor’s version was acceptable and that he is looking forward to seeing the measure become law.

“The most important thing here is getting this bill done and doing what we can to boost New Jersey’s boating and marina industry,” Van Drew said. “Politics is the art of compromise.” But even if Christie’s version of the bill wins approval in the Senate later this month it will still have to clear the Assembly as well. And with all 80 seats in the Assembly up for grabs this November, that could take a while. The current legislative calendar includes no Assembly voting sessions scheduled in either September or October.

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