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Senator Jeff Van Drew, D-Cape May, Atlantic and Cumberland, hears testimony during the Senate Environment Committee.

TRENTON – Legislation sponsored by Senator Jeff Van Drew and Senator Jim Whelan that would promote economic activity in the state’s shore regions and protect area businesses by imposing a limit to the state sales and use tax on non-commercial boats was approved today by the Senate Economic Growth Committee.

The bill, S-2784, would provide a maximum limit of $20,000 on the amount of sales and use tax that can be imposed and collected on a non-commercial boat or other vessel including motorboats, sailboats, yachts and cruisers. It would also establish a limited grace period of no more than 30 days to impose the tax cap for specific boats and vessels that were purchased and used out-of-state and that must be legally operated by the resident purchaser. Also, under the bill, individuals must not be engaged in any business or profession in which the boat or vessel will be used within the state. The legislation also specifies that the Director of the Division of Taxation in the Department of the Treasury would have the authority to adopt rules and regulations that would ensure that the purposes of the bill are being carried out. Under the current law, boats and other vessels are subject to a seven percent sales tax, according to the State of New Jersey Department of Treasury.

Keeping our taxing regulation as is could leave us at a real economic disadvantage,” said Senator Van Drew (D-Atlantic/Cape May/Cumberland). “A more competitive tax system will help to even the playing field with other states, spurring businesses from New Jersey residents and out-of-state consumers. Fishing and boating industries would also benefit from this initiative, especially local businesses that depend on noncommercial boats for their success.”

An article from the Press of Atlantic City highlighted the concerns residents and businesses held over New Jersey’s sales and use tax on boats. According to the report, states like Florida provide a lower sales tax along with a sales tax cap of about $20,000. The sponsors noted that New York and Maryland also have a cap on these taxes, and the state of Delaware does not have a sales tax. New Jersey has no cap in place, which creates a significant price difference for consumers, particularly when purchasing larger and more expensive vessels. The different tax treatment – including with our neighbors – results in New Jersey losing revenue, Senator Van Drew added .The bill seeks to level the playing field for both businesses and residents actively involved in the boating industry.

“By limiting consumers and businesses with our current sales and use tax, we are driving residents and companies to other states where they can save tens of thousands of dollars when purchasing their boats,” said Senator Whelan (D-Atlantic). “If we continue to ignore this issue, our fishing and boating industry will be seriously impacted in the future. A cap on our sales and use tax is a common sense step to ensure that businesses and consumers thrive in New Jersey.”

The bill was approved by a vote of 5-0. It now heads to the Budget and Appropriations Committee.

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