New Jersey is charging boaters tens of thousands of dollars in taxes and fees, but two South Jersey lawmakers are sponsoring legislation that they hope will level the playing field for businesses who build or sell boats in the state. 

Sailing boat
Sailing boat (Lidian Neeleman, ThinkStock)

Under current state law, the state's 7 percent sales tax is imposed on those that purchase boats in New Jersey and those that live in New Jersey, but purchase a watercraft vehicle in another state. In addition, the state also imposes the 7 percent sales tax on out-of-state residents that keep a home in New Jersey as well.

State Senators Jeff Van Drew (D-Cape May Court House) and Jim Whelan (D-Northfield) introduced legislation on March 9 that would establish a sales tax cap on boat purchases at $20,000.

"In my mind, overtaxing causes diminishing returns. We want to keep them in New Jersey. We want to keep people building boats in New Jersey. We want those who recreate in New Jersey and fish in New Jersey to stay in New Jersey," Van Drew said.

The sales tax can be bad for business, especially since many other states already have a sales tax cap on the books. For example, Florida caps sales tax on boat sales at $20,000.

Under the proposal, the sales tax cap would cover non-commercial boats such as motorboats and larger vessels such as sailboats, yachts and cruisers.

State Senator Whelan said the higher the sticker price of the boat, the higher that 7 percent sales tax in New Jersey zooms. Whelan said charging the full 7 percent state sales tax is "limiting."

Van Drew said he thinks capping the sales tax at $20,000 is fair.

"It's similar to what some states have. I would actually like a zero figure, but I don't know if we can get that through the Legislature. We're going to have to fight to get this through the Legislature," Van Drew said. He added that it's possible the figure might lower to $15,000 if the bill can gain support.

Van Drew said the cap would also help other boat-related businesses along the Jersey Shore, repair facilities and those businesses engaged in supporting sport fisherman.


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