FYBA to petition Congress on boat show bond
Following the proven success of Florida’s $18,000 sales-and-use tax cap, local yacht brokers are looking to petition Congress for amendments to the nationwide boat show bond to increase superyacht sales activity in the US.…
Following the proven success of Florida’s $18,000 sales-and-use tax cap introduced in 2010, local yacht brokers are looking to petition Congress for amendments to the nationwide boat show bond to increase superyacht sales activity in the US.
The boat show bond was created as a way for non-duty-paid vessels over 24m (79ft) in US waters to be offered for sale or charter at a boat show for a period of up to six months at a time. It is applicable to foreign-built vessels that have not been imported to the country or US built vessels that have been exported.
Under current US law, the vessel pays a bond of twice the 1.5 per cent duty on the appraised value of the vessel, in order to be offered for sale or charter in the Florida boat show season extending from the October’s Fort Lauderdale show to March’s Palm Beach show. If the vessel remains in US waters over the six months’ limitation, it forfeits the bond; in the past, the time limit of six months has been strictly enforced.
In October Fort Lauderdale annually hosts the largest boat show by area in the world
Jeff Erdman, president of Bollman Yachts, is chair of the Florida Yacht Brokers Association (FYBA) Public Affairs Committee. He led the team that initiated the sales-and-used tax cap on boats purchased or brought into Florida from non-sales tax countries such as the Bahamas, the Cayman Islands and the British Virgin Islands.
Since the onset of the recession in 2008, Erdman says that the average length of time a superyacht is for sale has increased two- to threefold, from between 90 days and six months to between nine and 18 months. The proposed changes would adjust the law to the current market and allow any size vessel to be offered for sale or charter in the US anywhere and anytime, until the vessel is sold. The goal is to make the regulations more inclusive, allowing all vessels over 24m with a central agency listing to be offered for sale, for an unlimited time period and not restricted to boat show locations and timing. It would be renamed the “central listing bond”.
“What we are looking to do [as FYBA and the wider industry] is put down the red carpet and welcome superyachts to the US. We want to be yachting friendly and make America an enjoyable yachting destination to attract vessels from across the world. FYBA sees that changing the boat show bond will help the US achieve these goals,” explained Erdman.
By citing the fiscal success of the tax cap, Erdmann hopes to convince the US Congress, which has the authority to change the boat show bond regulations, that relaxing the current restrictions on superyacht sales will be good for business as well as the US Treasury.
Prior to the sales-and-use tax cap’s introduction on 1 July 2010, all boats sold or delivered in Florida were subject to a six per cent sales-and-use tax, unless specifically exempt. For example, a 50m yacht costing $5m would have to pay a $300,000 use tax if closed in Florida’s waters. As a result, more than six out of 10 buyers of boats sold by Florida brokers were registering and operating their boats outside of Florida in order to legally avoid paying Florida’s sales tax. The change put a limit of $18,000 on the tax and in March FYBA released statistics from a study of the revenue that was brought in by the cap in its first year. The study was carried out by Thomas J Murray and Associates and sponsored by FYBA.
The state’s legislative staff had originally projected a loss of $1.5m in the first year after the $18,000 cap went into effect. However, the study showed that there was over $13.46 revenue generated by the yacht sales related to the cap, and out-of-state transactions and closing of sales by FYBA members were reduced by 40 per cent.
“What we are able to show with these results is that a ‘win-win’ situation can be created if you remove barriers to commerce and enable both business and the government to benefit,” said Erdmann. FYBA plans to undertake a nationwide effort to generate support for these changes.
In late April, Erdman and FYBA vice president Lon McCloskey visited Washington DC as part of the USSA’s American Boating Congress group. During the two days of visit to Capitol Hill, the brokers spoke with legislators about their proposed changes and how they would benefit the US marine industry and the wider economy.
While Erdmann is cautiously optimistic, he admits that convincing Congress to change the law will take some time. No action is expected this year due to the political gridlock in Washington and the upcoming elections in November. There is plenty of spadework to be done before next year, however. FYBA is looking for a bill sponsor, and hopes to gather support from the marine industry nationwide.
Talks with the National Marine Manufacturers Association and the Northwest Marine Trade Association have already been launched and there have been initial consultations with US manufacturers and customs brokers. FYBA is vetting the proposal in terms of its specific language and Erdmann urges anyone interested in learning more about the proposed changes to contact him at jeff@bollmanyachts.com.
It has often been said that Americans thrive in a tough climate; perhaps a Pioneer spirit of sorts emerges when the going gets tough in a way not reflected by European cousins. Since taking up my position as US Editor for The Superyacht Group, I have noticed in all areas of the US superyacht industry that the reaction to the recession is to pick oneself back up and try again; a resilience of which it should be proud. And whether it’s to petition Washington for less restrictive regulation and legislation, adapting company structures and manufacturing processes (see the US new build report in the upcoming issue of The Superyacht Report), or trying to improve a buyer experience at a boat show to encourage sales, let’s hope that all this resilience pays off for the US superyacht industry, while Europe is still struggling to get to grips with its fiscal challenges.
Related links
Bollman Yachts
FYBA
The boat show bond was created as a way for non-duty-paid vessels over 24m (79ft) in US waters to be offered for sale or charter at a boat show for a period of up to six months at a time. It is applicable to foreign-built vessels that have not been imported to the country or US built vessels that have been exported.
Under current US law, the vessel pays a bond of twice the 1.5 per cent duty on the appraised value of the vessel, in order to be offered for sale or charter in the Florida boat show season extending from the October’s Fort Lauderdale show to March’s Palm Beach show. If the vessel remains in US waters over the six months’ limitation, it forfeits the bond; in the past, the time limit of six months has been strictly enforced.
In October Fort Lauderdale annually hosts the largest boat show by area in the world
Jeff Erdman, president of Bollman Yachts, is chair of the Florida Yacht Brokers Association (FYBA) Public Affairs Committee. He led the team that initiated the sales-and-used tax cap on boats purchased or brought into Florida from non-sales tax countries such as the Bahamas, the Cayman Islands and the British Virgin Islands.
Since the onset of the recession in 2008, Erdman says that the average length of time a superyacht is for sale has increased two- to threefold, from between 90 days and six months to between nine and 18 months. The proposed changes would adjust the law to the current market and allow any size vessel to be offered for sale or charter in the US anywhere and anytime, until the vessel is sold. The goal is to make the regulations more inclusive, allowing all vessels over 24m with a central agency listing to be offered for sale, for an unlimited time period and not restricted to boat show locations and timing. It would be renamed the “central listing bond”.
“What we are looking to do [as FYBA and the wider industry] is put down the red carpet and welcome superyachts to the US. We want to be yachting friendly and make America an enjoyable yachting destination to attract vessels from across the world. FYBA sees that changing the boat show bond will help the US achieve these goals,” explained Erdman.
By citing the fiscal success of the tax cap, Erdmann hopes to convince the US Congress, which has the authority to change the boat show bond regulations, that relaxing the current restrictions on superyacht sales will be good for business as well as the US Treasury.
Prior to the sales-and-use tax cap’s introduction on 1 July 2010, all boats sold or delivered in Florida were subject to a six per cent sales-and-use tax, unless specifically exempt. For example, a 50m yacht costing $5m would have to pay a $300,000 use tax if closed in Florida’s waters. As a result, more than six out of 10 buyers of boats sold by Florida brokers were registering and operating their boats outside of Florida in order to legally avoid paying Florida’s sales tax. The change put a limit of $18,000 on the tax and in March FYBA released statistics from a study of the revenue that was brought in by the cap in its first year. The study was carried out by Thomas J Murray and Associates and sponsored by FYBA.
The state’s legislative staff had originally projected a loss of $1.5m in the first year after the $18,000 cap went into effect. However, the study showed that there was over $13.46 revenue generated by the yacht sales related to the cap, and out-of-state transactions and closing of sales by FYBA members were reduced by 40 per cent.
“What we are able to show with these results is that a ‘win-win’ situation can be created if you remove barriers to commerce and enable both business and the government to benefit,” said Erdmann. FYBA plans to undertake a nationwide effort to generate support for these changes.
In late April, Erdman and FYBA vice president Lon McCloskey visited Washington DC as part of the USSA’s American Boating Congress group. During the two days of visit to Capitol Hill, the brokers spoke with legislators about their proposed changes and how they would benefit the US marine industry and the wider economy.
While Erdmann is cautiously optimistic, he admits that convincing Congress to change the law will take some time. No action is expected this year due to the political gridlock in Washington and the upcoming elections in November. There is plenty of spadework to be done before next year, however. FYBA is looking for a bill sponsor, and hopes to gather support from the marine industry nationwide.
Talks with the National Marine Manufacturers Association and the Northwest Marine Trade Association have already been launched and there have been initial consultations with US manufacturers and customs brokers. FYBA is vetting the proposal in terms of its specific language and Erdmann urges anyone interested in learning more about the proposed changes to contact him at jeff@bollmanyachts.com.
It has often been said that Americans thrive in a tough climate; perhaps a Pioneer spirit of sorts emerges when the going gets tough in a way not reflected by European cousins. Since taking up my position as US Editor for The Superyacht Group, I have noticed in all areas of the US superyacht industry that the reaction to the recession is to pick oneself back up and try again; a resilience of which it should be proud. And whether it’s to petition Washington for less restrictive regulation and legislation, adapting company structures and manufacturing processes (see the US new build report in the upcoming issue of The Superyacht Report), or trying to improve a buyer experience at a boat show to encourage sales, let’s hope that all this resilience pays off for the US superyacht industry, while Europe is still struggling to get to grips with its fiscal challenges.
Related links
Bollman Yachts
FYBA
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