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article imageBig yachts tax break sails through Texas House committee

By Lynn Herrmann     May 1, 2011 in Politics
Austin - Big yachts in the state of Texas are one step closer at being able to compete with Florida on the issue of lower taxes, even as the Lone Star state continues struggling with a budget deficit by some estimates as high as $27 billion.
The state House Ways and Means Committee gave the okay last week to House Bill 2187, by an 8-3 vote, that its supporters claim is essential for keeping yacht sales and their associated economic activity in Texas, rather than being enticed by lower taxes in Florida.
Rep. John Davis, R-Houston, author of the bill, said: “It’s economic development. I think it’s the right thing to do to keep us on a level playing field with Florida,” according to the San Antonio Express News.
However, not all members of the committee were in agreement with Davis’ assessment. Rep. Mike Villarreal, D-San Antonio, voted against the measure, citing ongoing pressures in the state’s education system and healthcare arena as being of greater concern.
“With all due respect, sometimes I'm not sure what planet my Republican colleagues live on,” Villarreal said, MySA reports. “How can they say tax breaks for yachts are a higher priority than supporting our children's classrooms or keeping nursing homes open?”
Davis’ original version of the bill had set a ceiling on sales tax of the big boats, regardless of their sales price, at $15,625. That amount is the tax one would expect to pay on a $250,000 yacht. After consideration, he changed that amount to $18,000, equal to Florida’s tax rate. The revised rate is what one would normally pay on a $288,000 yacht under Texas’ current tax rate.
A financial review of the original bill noted it would cost the state around $1.4 million annually in lost taxes. Yacht brokers and other proponents of the bill pointed out, however, that number does not account for the ripple effect of lost yacht sales.
Next up for the bill is a visit to the full House, where both Davis and Ways and Means Chairman Harvey Hilderbran, R-Kerrville, like its chances.
“The hearing was pretty convincing that we're losing business to Florida. It's one of those things you have to do,” Hilderbran said, according to MySA.
Sen. Leticia Van de Putte, of San Antonio and chair of the Senate Democratic Caucus, apparently was not impressed with Hilderbran’s evaluation of the yacht bill, and asked: “Why don’t you tell that to a kindergarten parent?”
The luxury boat tax cap comes at a time when the state is dealing with a massive budget deficit upwards of $27 billion and state politicians in both houses are currently considering budget proposals that would slice billions from social services programs and also delete billions from current funding for the state’s public school system.
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