Reduced Sales Tax in CT Sparks Boat Buying

Connecticut is starting to see the reward of a lower sales tax on boat purchases that went into effect July 1. Public Act 18-81 reduced the tax rate on the sale of boats, motors and trailers from 6.35 percent to 2.99 percent. The new rate applies to new or pre-owned vessels and those purchased separately or as a package. The tax cut effectively reduces the sales tax by 53 percent, with the tax savings calculated at around $1,000 per $30,000 purchased. The Connecticut Marine Trades Association (CMTA) said the reduction helps Connecticut be more competitive with neighboring states such as Rhode Island, New Hampshire, and New York in attracting boaters.

“The economic reality of this tax reduction is that it will help to re-create jobs that have been lost in past years within the marine trades in Connecticut, ” said Kathleen Burns, executive director of CMTA. “It’s been noted that over the past years when our tax rate was above 6 percent and higher than every other state on the East Coast without a cap, that about 40 percent of our boat sales left the state taking with them their service work, slip, mooring and storage. The calculations show that for every 16 Connecticut boat registrations lost, the equivalent of one full time job in the marine trades is also lost and the decline has been impactful,” she said.

Throughout the holiday week, marine dealers were posting on social media and emailing the news of active sales. “The incredible buying activity that is taking place right now is amazing! We have provided a reason to buy and the success of the new lower tax rate has been a bit overwhelming. We are thrilled with the success,” reported Don MacKenzie, vice president and general manager of Boats Incorporated in Niantic, only two days after the reduction went into effect.

The buying action continued as the heat wave drove people to the water, marinas and dealers. “What a difference almost three percentage points can make. With the new tax rate, we are back to being competitive with boat dealers in our surrounding states. We are looking forward to finishing out the season strong!” said Mitch O’Hara Jr., vice president of Candlewood East Marina in Brookfield.