Luxury Tax Repeal Would Be Boost To Boat Builders

U.S. yacht builders were heartened by President Bush's recent budget proposals, which included a request to Congress to repeal the luxury tax on yachts priced at over $100,000. The repeal, which is likely to be approved, would be retroactive to February 1.

Since the tax took effect in January 1990, hundreds of U.S. vessel builders have spoken out against it.

The tax, combined with the recession, tighter bank financing, and the Gulf war, took a heavy toll on yacht builders, forcing many to lay off workers and some to file for bankruptcy protection.

Marketing managers for several yacht builders are hoping that they will be swamped by buyers who held off in the expectation that the tax would be repealed.

The 10 percent tax applies to the amount of the cost above $100,000, meaning that a $300,000 yacht would carry a $20,000 luxury tax.

Besides the luxury tax, owners are also accessed state and local taxes.

Overall employment in the boatbuilding industry, including the builders of smaller, less-expensive boats, has dropped from 600,000 in 1988 to 400,000.

Maritime Reporter Magazine, page 32,  Mar 1992 Caribbean

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First published in 1881 Maritime Reporter is the world's largest audited circulation publication serving the global maritime industry.