The International Yacht Brokers Association is hosting a media event today with U.S. Rep. Lois Frankel, D-Fla., to reintroduce a bill to alter an 87-year-old law that prevents sales of foreign-flagged yachts to U.S. citizens while the boats are in U.S. waters.
“It’s garnering more support all the time, but several supporters last year weren’t re-elected,” IYBA executive director Cindy Sailor told Trade Only Today. “This is the 115th Congress. Some people didn’t get re-elected, so she has to reintroduce the bill every time there’s a new Congress.”
The bill, now introduced as H.R. 2369, seeks to change the Tariff Act of 1930, which requires foreign-flagged boats to pay an import fee prior to being sold in U.S. waters. The bill would not remove the tax paid on the boat, but would defer payment of it until after the boat is sold.
“We’re not trying to get any sort of forgiveness for paying the duty. It’s just at the point of sale, rather than when it goes on the market,” Sailor said.
The way it stands now, the tax is paid on the value of the boat rather than what the seller actually gets for the boat.
“It’s counterintuitive to pay the import tax before you can even offer it for sale because you don’t know what the actual selling price is going to be,” Sailor said. “A 1.5 percent tax is sizable, and most people don’t want to pay that just to put the boat on the market.”
That means lost sales in the United States, which the IYBA says translates to lost jobs and revenue.
“Within the first year of a boat owner buying a boat, they usually spend about 13 percent of the value of the boat in the first year on refits, getting it updated somehow,” Sailor said. “Bottom paint, or some kind of refit, or replacing textiles. That’s typically the rule of thumb. People want to put their touch on their new boat.”
If foreign-flagged boats are discouraged from coming to the United States for sale, that revenue will wind up elsewhere, the IYBA says. “And if a Canadian walks onto the docks, he can buy that boat. But if an American wants to buy the boat, they can’t. They can’t even look at it because it’s not been imported yet,” Sailor said.