Guest: Boost tourism by changing recreational-boating tax
A modest fix to our tax code could keep these corporate-entity-owned vessels here and allow our state to benefit from their economic impact, according to guest columnists Nick Harper and Kristine Lytton.
Special to The Times
WASHINGTON state has inadvertently created a nice little stimulus package for British Columbia, Florida and other ports around the world. That’s due in large part to a disproportionate tax that is placed on recreational vessels visiting from out of state that remain in our state for more than 60 days each year.
These boats, which are owned by an entity such as an LLC or S corporation, either leave before that 60th day or stay away from our waters altogether.
The good news is that a modest fix to our tax code could keep these vessels here and allow our state to benefit from their economic impact.
The modification we are proposing could generate possibly millions of new dollars for local economies around the Puget Sound. This fix would expand the cruising time for marine tourists from 60 days to 180 days before the tax kicks in.
These boats spend about 10 percent of their value annually on maintenance and upkeep — that’s a huge chunk of change for a vessel that can cost literally millions of dollars.
When boats from out of state are in our marinas, a tremendous amount of economic activity is generated not just for the working waterfronts that work directly on these vessels but all of the indirect and induced labor that goes toward supporting our state’s $4 billion recreational-boating industry. Seattle has a large piece of this maritime pie, as do other areas including Everett, Anacortes, La Conner in Skagit County, Bellingham and the San Juan Islands.
When it comes to boat ownership, it is important to note that boats can be owned in one of two ways. The first, and most common way is to own it outright in your name. If you bring your boat into the state and it’s owned in this manner, our state allows you to stay 180 days without paying a use tax, which amounts to about 10 percent of the boat’s value. Boat owners spend those days getting repairs and visiting our area, spending money wherever they go.
The second way to own a boat is in the same manner a business would be owned, such as an LLC. This path is very common for boats that are owned in a partnership or that are available for charter. Unfortunately, these boats only get 60 days in our waters before they are charged a substantial tax.
Recently, one of the largest yachts in the world, the $330 million 440-foot Serene, visited Seattle. This boat will spend at the most 60 days in our waters before it departs. That’s unfortunate because each day the boat and its 52-person crew are here they spend thousands of dollars. When this floating economic-stimulus package floats away, their wallets and spending power will set sail as well.
We and the Northwest Marine Trade Association are looking to bring parity to both types of boat ownership. We introduced a bill in the past legislative session to give all boaters 180 days in state waters. An economic-impact study funded by the trade association showed our state could make $29 million annually by making this change.
Each year, the state Legislature is greeted with billions of dollars in budget shortfalls. Year after year, we move money from one program to another or cut or defund critical programs to make ends meet. Every dollar we generate is sacred and a relatively simple way to create a substantial amount of revenue is to pass the Marine Tourism Bill.
State Sen. Nick Harper, D-Everett, represents the 38th legislative district which includes Everett and Marysville. State Rep. Kristine Lytton, D-Anacortes, represents the 40th legislative district which includes San Juan County.