Sellers Say Vessel Tax Is Driving Big Boats Out of Maryland

Byline: Associated Press/Alex Jackson, The Capital of Annapolis, Md.

ANNAPOLIS, Md. (AP) — Hamilton Chaney lost a customer last week.

Dr. Richard Rende, a 60-year-old orthopedic surgeon from Steamboat Springs, Colo., told Chaney his 48-foot sailing catamaran would be departing early from Herrington Harbour North, the marina Chaney’s family owns in southern Anne Arundel County.

On June 25, he arrived at the marina, where he pays $1,000 a month to dock. He has spent $30,000 in Maryland — mostly on boat work with different companies, but also at local restaurants and hotels.

But Rende is leaving for Delaware to avoid Maryland’s vessel excise tax, which would force him to pay 5 percent of the value of his boat if he stayed in the state longer than 90 days this year.

The excise tax is becoming more of an issue for an industry struggling to stay afloat. While it might be a mere hassle for some boat owners, others say it’s why Maryland didn’t enjoy rebounded boat sales in 2011.

Brokers say purchases lag in Maryland because residents go to tax-free Delaware or Virginia, where there’s a 2 percent tax and a $2,000 tax cap. And some marina owners blame Maryland’s excise tax for keeping visiting boaters away from state docks.

The Department of Natural Resources has shied from decreasing or capping the tax for years. The tax powers the Waterway Improvement Fund, which provides grant money for dredging and other projects to keep the state’s waters healthy.

But some boating advocates say capping the tax, as Virginia did years ago and Florida in 2010, would increase tax revenue for Maryland. In next year’s General Assembly, the Marine Trades Association of Maryland hopes to propose such a bill.

“A tax cap will mean more money, more jobs and more revenue for the state,” Chaney said. “It should have been done eight or nine years ago. But now it has to be done.”

It’s hard to fathom that Maryland, home to Annapolis, known as the “Sailing Capital of the World,” would be in the bottom half of the country in total sales for boats, engines, trailers and accessories.

Yet Maryland’s sales fell from $183 million in 2010 to $162 million in 2011, placing the state No. 26 in the nation. In 2008, that number was $248.5 million.

Across the bay, Delaware saw an increase in registered boats. The tax-free state registered 57,687 vessels in 2011, up from 56,669 in 2008.

In 2011, 85 boats more than 65 feet long were registered in Maryland. Five years ago, 121 boats 65 feet or longer registered. Moreover, the state lost 217 boats between 40 and 65 feet in that same time period.

That’s why Maryland industry business owners such as Ezra Androus, president of Annapolis Yacht Co., said something needs to be done. Boat owners and buyers will keep leaving the state, Androus said, if the state doesn’t give them any incentive to stay.