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April 8, 2010 Jay Finegan, 287-1445
Rep. Langley: New tax law will benefit nonresident boaters and coastal businesses

AUGUSTA – State Rep. Brian Langley says a new tax break for boaters will lift coastal economies and encourage nonresident boaters to keep their vessels in Maine for longer stretches of time.

Shortly after midnight on April 8, the Maine House and Senate passed LD 659, An Act to Reduce the Sales Tax on Certain Watercraft. The bill provides a 60 percent reduction in the sales and use tax for nonresidents who keep their boats in Maine waters longer than 30 days.

“Current law requires an out-of-state buyer of watercraft to leave the state in 30 days or pay a 5 percent sales tax,” said Rep. Langley (R-Ellsworth), who co-sponsored the legislation. “In the case of a large yacht, that tax can total tens of thousands of dollars.

“This bill was introduced to keep those boats in Maine waters for sea trials, repair work and to help foster a relationship between the boat builder and the customer,” he added. “They’ll now pay just a 2 percent sales tax if they extend their stay past the 30-day limit. There’s no sales tax at all on boats that leave Maine waters in less than 30 days.”

The 60 percent sales tax exemption applies to watercraft; sales under contract for the construction of a boat and for the required materials; and sales of material for repair, alteration, refitting, overhauling or restoration of a watercraft.

“The marine industry spoke in favor of this bill during the public hearings,” said Rep. Langley, who serves on the Taxation Committee. “They stated that Rhode Island has captured this business because they have no sales tax on watercraft.

“Nonresidents who have a boat built in Maine often make many trips up here during construction,” he added. “They form a relationship, a trust, with the builder. Boatyards tell us that if the owner could legally stay past the 30 days, he or she often will continue to use the boatyard for the life of the boat – for repairs, maintenance, storage and in some cases for a second boat. One boatyard lost a $20,000 paint job to an out-of-state yard because the owner didn’t want to risk that the job would last longer than 30 days.”

Rep. Langley said the new law benefits not just boatyards, boat dealers and marinas but also restaurants, grocery stores and other businesses in coastal communities.

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