Yacht companies in New York defended a tax break that was included in the state budget, saying the measure will help them retain customers who have been going to other states to buy their luxury boats.
Unions and groups that support the poor have been criticizing the tax break that would limit sales taxes on the purchase of yachts and planes. Gov. Andrew Cuomo and the state Legislature couldn’t agree on a minimum-wage increase, but can agree to helping the rich, the groups charged.
But Chris Squeri, executive director of the state Marine Trades Association, said the tax break is being misunderstood: Yacht companies are losing out to Florida and other states that put a cap on yacht sales tax.
So the tax break, while helping the rich customers, is really aimed at helping the dealers that sell the luxury items, he said. It would take effect June 1.
“People see it and say, ‘Rich guys are getting a tax break.’ Not really. We didn’t create this problem,” Squeri said. “We’re just trying to fix this problem so we can create sales-tax revenue in the state, we can help the economy and help save and create jobs.”
Under the New York measure, the purchase of a private airplane that seats fewer than 20 people and can carry less than 6,000 pounds would be exempt from sales tax. When it comes to boats, the amount of the purchase price greater than $230,000 wouldn’t be subject to sales tax.
The biggest competition has come from Florida, which in 2010 capped its sales tax on yachts at $18,000. Since the law took effect, sales-tax revenue soared and the number of yachts registered there increased 28 percent between 2010 and 2012, according to the Florida Yacht Brokers Association.
Squeri said yacht dealers met with Cuomo in January at the New York Boat Show and urged him to support the tax break. Cuomo didn’t include the measure in his proposed budget, but the Assembly and Senate did and it remained in the final budget deal this week.
So by maxing the sales tax at $230,000, it puts New York on par with the Florida cap.
“At the end of the day, the business will go out of state. It’s really a regional market, not a state market,” said Michael Beers, assistant sales manager McMichael Yacht Brokers in Mamaroneck, Westchester County.
Still, the tax break is being criticized at a time when New York has some of the worst poverty in the nation.
“A state budget that raises spending, lacks even minimal structural reform and includes tax breaks for yacht sales makes me wince as a New Yorker,” Westchester County Executive Rob Astorino, the GOP candidate for governor last year, said in a statement. “Clearly there is a disconnect between what middle-class taxpayers are experiencing and how Albany sees things.”
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