Death and Taxes, new Boat tax proposed in Washington state
In a letter he wrote in 1789 after the US Constitution had been ratified the prominent founding father Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.”
While we can all accept that one day the former will catch up to us, the Boston Tea Party and other notable events have taught us that tax policies can sometimes be changed through action of the people. Despite their seeming inevitability, we can influence what taxes are enacted by reaching out to our representatives. For Washington state residents, especially those who are boaters, now is the time to speak out!
In Washington state where Best4Boats is based and where I live with my family there is a proposal currently on the table (Senate Bill 5801) to establish a tax on all vessel sales over $500,000. While this may seem like a convenient way to “tax the rich” in order to solve the state’s budget shortfalls, taxes like these cause numerous problems and historically fail to raise the revenue they are supposed to.
The biggest issue is jobs. When a 10% luxury tax was put on boats in 1991 people simply stopped buying boats. Recreational boat sales dropped 77% in the first year, devastating the boating industry here in Washington which contributes nearly $10 billion per year in commerce and proceeds to the state. The nineties luxury tax caused the loss of over 25,000 jobs across the boat manufacturing, maintenance, and marina industries. The people who lost their jobs or had reduced livelihoods because of this tax were not rich. They were hardworking Americans trying to support their families. Eventually this tax was repealed because it wasn’t working. Instead of raising the revenue it promised, the luxury tax did enough damage to the economy and the marine industry that it had to be repealed.
Across the border in Canada a luxury tax was placed on certain boats in 2022 that has eliminated jobs in the marine industry and depressed the boat business there. The Canadian luxury tax led to severe job losses in the boating industry causing boat manufacturers, boatyards, many operated by small businesses, and marinas to struggle. Skilled tradesmen like cabinet makers, marine electricians, and more were forced to leave the industry. It will take years of costly time and training to get these workers back even after the tax is repealed and the manufacturing sector begins to grow again.
A Boating BC survey polling dealers and manufacturers about impacts from the luxury tax showed losses of more than $211 million (CAD). New boat sales decreased by 85% causing brokers and dealers to stop ordering boats. The revenue that was projected from this luxury tax has never been met because decreased sales have severely capped it. Results released by the Canada Revenue Agency (CRA) from the September 2022 implementation of the tax to June 2024 show that revenues were $40 million short of the PBO’s (Parliamentary Budget Office) projections. Inventory for vessels over $250,000 (the Canadian luxury tax threshold) were at record lows because dealers refused to stock new boats and buyers stopped making purchases in this category to avoid the tax. According to Rick Layzell, President of the Canadian Marine Retailers Association, hundreds of Canadian service jobs were lost because of the slowdown in boat sales.
Luxury taxes don’t deliver the revenue they intend to collect. Buyers either postpone purchases or forego them altogether. There are also ways to circumvent these taxes, such as registering vessels in more tax-friendly locations like Oregon, Idaho, or Alaska. During the 1991 yacht tax the US government only managed to collect half the $31 million they anticipated collecting. At the same time unemployment benefits rose to over $24 million from workers that lost jobs because of the business slowdowns the tax caused.
Luxury tax legislation always seems like an easy way to raise revenue, but the negative economic impacts that they cause have proven time and again that they don’t deliver the promised revenue. A vast sector of marine-related jobs are at risk, aside from the most obvious boat manufacturing positions. As the marine sector slows down, it negatively affects repair services, marina operations, charter/boat rentals, restaurants, and boat related tourism especially in waterfront areas. These negative effects are felt by thousands of hardworking people throughout the state that work both in and out of the marine industry.
Washington state boaters already pay an annual value-based excise tax when they register their boats. If they stop buying boats or move their boats to other more tax-friendly locations, the state could wind up losing some of the approximately $20 million it currently collects annually from this existing boater tax. This shifting of boat assets could negate any positive impact expected from the proposed new luxury tax.
“Our goal is to promote the growth of recreational boating and the businesses of our members. Based on clear historic data we know that the proposed Washington State luxury boat tax will have a devastating impact on the marine industry causing job losses at every pay grade. This unfairly targets recreational maritime which already contributes $20 million annually in value-based excise taxes on boats, not to mention the current sales and property taxes we generate for state and local coffers. Together we intend to stand up and make our voices heard to encourage our elected representatives to defeat this doomed tax proposal.”
George Harris, President/CEO, (NMTA) Northwest Marine Trade Association.
Most boaters in Washington state aren’t ultra-wealthy fat cats with money to spare that this luxury tax is trying to target. Boaters are from families that have worked hard to save up to buy a boat so they can spend time on the water. For me and my family, boating is a passion, and we worked hard to be able to buy a small boat. We then enjoyed the boat and saved up to get a bigger trailerable boat. Eventually, we were able to get a slip and keep our boat in the water so we could use it all year round. We sacrifice a lot to have a boat, but it is well worth it because we love boating and experiencing the people and waterways of the Pacific Northwest. This tax will stop other families like us from buying a bigger boat or even from owning a boat at all.
I am proud to work in the marine industry along with boat builders and marine tradesmen. Marine industry workers are hardworking, respected members of our community. The industry is not generally high-paying, and most of the people I work with are in this business because they like boats, boaters, and the water. This luxury tax can and will create undue burdens on boaters and industry professionals alike who are not “the rich” that the legislature is proposing to tax.
I encourage all boaters and aquaphiles in Washington state to contact your state representatives and speak out against this proposed boat tax. It is time to let your voice be heard as the Washington legislature is deciding on this proposal in April 2025.
The Northwest Marine Trade Association in conjunction with the Recreational Boating Association of WA, the Northwest Yacht Brokers Association, Marine Retailers Association of the Americas, and the (NMMA) National Marine Manufacturers Association have crafted a letter which you can use to contact your representative.
Death and taxes might be a certainty like Franklin said but don’t let the proposed luxury tax in Washington state lead to the death of our marine industry! Let’s all stand together and explain to our representatives why this luxury tax will eliminate jobs and hurt the hardworking families in the marine industry and devoted boaters that will be unduly burdened by this tax. Together we can make our voices heard!
Encourage your Washington State House representative to Vote NO on SB 5801.
Find your rep here: https://app.leg.wa.gov/DistrictFinder/
Use this sample letter if it helps:
