TALLAHASSEE — In a year when meals for the elderly, Alzheimer's programs and education funding are facing budget cuts, lawmakers pushing a tax break for yacht buyers had some explaining to do Thursday.
Advocates of the break say buyers dodge the tax now, and this will counter that while supporting boat building and sales in a tough economy.
The $1.5 million proposal is included in a $193 million package of tax incentives passed by the Senate 38-0 on Thursday. A similar measure was adopted by the House Finance and Tax Council, where leaders are prepared to spend $89 million in tax incentives this year.
The measure caps the sales tax on boats sold in Florida at $18,000, or the amount that would currently be taxed on a $300,000 yacht.
Under the proposal, all boat purchases are subject to Florida's standard 6 percent sales tax. But once the tax hits $18,000, it stops, and the rest of the boat's cost is tax free.
In a budget year marked by deep and painful cuts to basic state services, the tax incentives for high-end boats has some lawmakers wary.
Sen. Frederica Wilson, a Miami Democrat, voted for the package but admitted the yacht tax break is "hard to justify."
"It's a huge tax break in these hard times for the sale of extremely expensive airplanes and yachts," she said.
Supporters argue that the measure is needed to capture tax revenue now being lost by boat buyers who legally skirt Florida's tax laws. Yacht brokers commissioned a study showing that many high-end yacht owners avoid current taxes by buying their boats with foreign corporations and housing them off-shore.
"It's not a tax break," said Jeff Erdmann, president of Bollman Yachts in Fort Lauderdale. "It's a revenue generator. Nobody's getting a break here because they're not paying the tax at all. We're asking them to pay the revenues to the state of Florida."
The $18,000 cap is roughly the amount that owners spend to create offshore corporations. Erdmann estimates that the lower tax could bring in at least a quarter of the owners who currently go out of state.
Ron Johnson, general manager of a small Chris Craft boat dealer in St. Petersburg, said the bill would "absolutely" help his business, even though he mostly focuses on midsized boats. But he acknowledged that small boat dealers would be disappointed that their boats also did not receive a tax break.
The Senate's hefty tax package also includes a $7.5 million tax break for plane purchases, tax incentives for the space industry, ports, film productions and manufacturers. The tax breaks would be applied over three years.
Rep. Ellyn Bogdanoff, the chairwoman of the House Finance and Tax Committee, said the boat tax cut is one of several areas of agreement between the House and the Senate. Identical bills capping taxes on boats — but not airplanes — cleared committees in the House and Senate this week.
The House has approved similar proposals, and has budgeted $89 million for economic development in next year's budget. Committees in both chambers have also endorsed a $75 million film incentive package, though the larger Senate bill provides for only $20 million.
"We're basically on the same page on a lot of issues," said Bogdanoff, R-Fort Lauderdale.
Karen Woodall, an advocate for children's issues, noted that legislators promote tax breaks as a way to create jobs, but only for selective industries: "It's seems that the tax credits that they give are going to the more well-heeled employers and lobbyists."
Legislators so far refuse to take up measures that would put money into children's health care programs and draw down federal money for unemployment compensation — measures, she argues, that would provide health care jobs and give spending money to those who are out of work.
Democratic Sen. Dan Gelber of Miami Beach said the overall Senate package would help create jobs, but the boat tax cap "gives me some pause." Provisions to speed up local environmental permitting were also removed during debate, which eased concerns of several senators.
Gelber unsuccessfully lobbied to offset the bill's cost by closing several sales tax loopholes: "We really need to get into the habit of paying for these tax breaks."
But sponsoring Sen. Don Gaetz said the bill's cost is "seed corn" that will spur long-term job creation: "The bill is a hit on general revenue, there is no doubt about that. But if we expect any sort of harvest next year, we can't eat all of our seed corn."
Times/Herald staff writer Mary Ellen Klas contributed to this report.