Thursday, February 26, 2009

HB0451 Luxury Tax Update-Debrief

My Observations:

I just got back in town after a long day that started at 4:30 am. After a long drive down I-55 in pea soup fog and mist which turned into rain, I arrived at the State Capitol Building at about 9:45am.

I'd been to a city council session as part of my citizenship merit badge many moons ago, but never to a legislative session for our state. It was an interesting civics lesson for me. What I learned is that it is very important for each of us as taxpayers to be aware of what our lawmakers are proposing. We shouldn't just leave it up to special interest groups and lobbyists because their interests aren't always best for us. It takes everyone getting involved at some level to communicate dissaproval of legislation. Simply complaining after the fact, does no good to the process.

The legislators task is a difficult one, they are approached from many different angles by many different people. Ultimately it is their judgement and hopefully common sense that rings true and has them do the right thing in the best interest of the majority. In the electronic age we live in, information travels at a very fast pace. Transparency is there through the freedom of information act, but we need to know how to find it.

This story had a happy ending for now- but it is one that given the current state of our local and national budgets, may surface again. If it hadn't been for the NMMA newsletter, I may have missed it myself. Most importantly, I learned that the letter that we don't want to send can make a difference. I wrote to the sponsoring representative and presented my case as a business owner. When I spoke with him after the session, he commented on reading it and seeing my position on the bill (and understanding). I shudder to think what could happen (or happens) when people think- "Oh it won't make a difference" or "What can I do about it?".

YOU can make a difference! But It takes all of us speaking up.

Enclosed is the official press release from NMMA. Thank you to Dave Dickerson and Mark Adams for your support and guidance through this.


444 North Capitol Street NW
Suite 645
Washington, DC 20001

CONTACT: Christine Pomorski (; 202-737-9774)

Proposed Illinois Luxury Tax on Boats Withdrawn From Consideration

Boating organizations, including NMMA, were prepared to testify

WASHINGTON, DC, February 26, 2009 – Today, the Illinois State Legislature’s Revenue and Finance Committee decided not to move forward with HB 451, a bill to impose a five percent luxury tax on vessels sold in Illinois over a purchase price of $200,000. Mark Adams, vice president of sportshows for the National Marine Manufacturers Association (NMMA), along with opponents from six different marine-related organizations and businesses, attended the hearing to testify in opposition to the tax. However, before testimonies could be heard, the committee echoed industry concerns about the tax and withheld a motion to take up the legislation.

The proposed tax would have had a devastating effect on Illinois’ marine businesses, causing buyers to hold off on buying boats or cross state lines to make purchases. In the early 1990s, a similar national luxury tax on boats was enacted, only to be repealed two years later because the tax cost more to collect than the revenue it earned. The tax also led to 19,000 lay offs, cut boat sales by 40 percent, pushed tax revenue from boat sales to below pre-luxury tax levels and forced several brands of boats into bankruptcy.

“While we understand Illinois must address its looming budget deficit, we are pleased the committee realizes a counter-productive tax like this one is not the answer,” said David Dickerson, National Marine Manufacturers Association director of state government relations. “Despite assurances from the bill sponsor that similar measures will not be pursued, we will continue to monitor any new legislation moving forward,” Dickerson said.

National Marine Manufacturers Association (NMMA) is the leading association representing the recreational boating industry. NMMA member companies produce more than 80 percent of the boats, engines, trailers, accessories and gear used by boaters in the United States. The association is dedicated to industry growth through programs in public policy, market research and data, product quality assurance and marketing communications.

Picture of the Week: February 23, 2009

"Wanderer" on the hook in Kentucky Lake this past Summer. (D. Petit)

This week's Picture of the week comes from Dick and Kay Pettit, owner's of a 2003 Beneteau 423. This picture is unique because the Petit's are truly living the dream. I can't tell you how many people I sell boats to that say: "Our plan is to retire and sail away to live aboard our boat". Very few actually act on this dream. I heard these same words from Dick and Kay back in 2003 at the boat show when they purchased their new 423. In the years that ensued, the got the knowledge they needed to increase their competency on the water. Then a couple of year's ago Dick called me to tell me he wanted to put the finishing touches on his boat, had retired and was going to take his boat down the river to the gulf and eventually do the loop. A few grandchildren later and a slower trip than planned, the Petits are slowly making their way down. They balance their time between living aboard their boat and coming back to Chicago to see the family. It all starts with the dream, then making the commitment to act on it.
Something to think about: We can't take it with us and last I checked, I wasn't getting any younger. Way to go Guys!

HB0451 (Illinois Luxury Tax ) Update

Springfield, Illinois -The State Finance Sub-committee hearing just adjourned for the day. The session was a busy one with hearings on a flurry of Tax related proposed legislation.

I'm glad to report a partial victory on behalf of small business owner's and boaters in Illinois. Prepared with seven opponents to the proposed bill (representing AOPA, power boat dealers, sailboat dealers and NMMA) we received relief for now. There was no motion on HB0451 (State Luxury Tax). In speaking with the bill's sponsor Rep. La Shawn K. Ford (8th Dist- Chicago), he reaffirmed that he would not be moving forward with the bill this session. "You have my word" he said. So that is all we have to go on for now.

In speaking with a few other members of the Sales Tax and Finance Committee they echoed our concerns for the fact that any legisislation of this type would in fact have the opposite of its intended effect. It would drive revenue and jobs from the state and have further negative economic impact on industries (auto and marine) that are already seeing a slowdown. in business due to the economy. The 'ripple effect' would be felt in other ancillary businesses as well.

Several Representatives expressed their support of our position and saw a dim outlook for the bill. We will be keeping an eye out for any legislation of this type and hope that the state's lawmakers keep looking at ways to reduce unnecessary costs and wasteful spending in their efforts to address our state's budget deficeit.

More upon arrival in Chicago.. To read my debrief on the trip- Visit:

Lou Sandoval


Sent via BlackBerry from AT&T Wireless

Wednesday, February 25, 2009

Update on proposed HB0451

February 25, 2009

As I write this update, I am completing my final preparations on the talking points for the Illinois State Legislature- Revenue and Finance Committee hearing tommorrow in Springfield, IL. I will be part of a three person team that will be testifying on behalf of the marine industry in Illinois and the long-term effects of the proposed bill (HB0451) that will impose a 'luxury tax' on cars, retail goods and boats. I will be joined by a representative from the National Marine Manufacturers Association and Springbrook Marina ( a 30 y.o) family based power boat dealer from Seneca, IL.

We have received letters of support from neighboring states and from boat owners as far away as Washington and Florida. Our press release was picked up by Scuttlebutt News and the industry trade magazine Soundings Trade Only. The support has been overwhelming to say the least. Sailors and boaters from around the country have asked how they can get involved to make a difference. It appears to be an indicator on behalf of the taxpayers in our country that imposing legislation that negatively impacts businesses and places frivelous taxes on consumers will not be tolerated.

Support has come from all avenues of the boating community. The most resounding statements have come from sailors who are also small business owners themselves. They have seen first hand the impacts of continued taxation. The impact on businesses that are struggling to survive in tough economic times, while the legislative bills continue to tug at mythical tax revenues that never materialize nor have the intended impact- closing budget gaps produced by government waste and unnecessary spending.

We will report tommorrow as to the status of the bill. In the mean time, continue to write your state representatives. To type in your zip code and find your rep's info Click Here

Saturday, February 21, 2009

Get Involved: Proposed Bill HB0451 -Luxury Tax

Illinois Sailboaters,

We urge you to get involved and write to your state Legislator ASAP. Proposed bill HB0451 is slated for Hearings by the

Sales and Other Taxes, Subcommittee Hearing Feb 26 2009 10:15AM Capitol Building Room 122B Springfield, IL

Get Involved. Write a Letter to your Legislator and to the Sales Tax Sub-committee. Let them know that you object to the luxury tax proposed in HB0451. You can find your legislator at the following website: Get Connected

READ the full Bill

Friday, February 20, 2009

Boating Related Legislation Proposed in Illinois

State Representative LaShawn Ford- Chicago 8th District has introduced a bill (HB0451) that would impose an additional five (5) percent state tax on luxury items including:

1. Passenger Motor Vehicles to the extent that the selling price exceeds $60,000.
2. A vessel (watercraft) to the extent that the selling price exceeds $200,000 (new and used)
3. An aircraft to the extent that the Selling price exceeds $500,000.
4. Jewlery or fur clothing and footwear to the extent that the selling price per item of jewelry or fur clothing and footwear exceeds $20,000.

The bill provides for all amounts collected to be deposited into the General Revenue Fund. Slated effective day is proposed as 7/1/09.

The National Marine Manufacturer's Association (our trade organizing group) is working closely with its Illinois members to draft testimony in opposition of the tax.

It is fully recognizeable that the State is looking for opportunities to shore up the $9 Billion dollar budget deficit. The bill was introduced on February 4, 2009 by Representative Ford. On 2/9/09 the bill was assigned to the state's revenue and finance committee of the 96th General assembly.

How this impacts you as a member of the sailing community:

1. Purchase of New or used boat in the State of Illinois:
2. Sale of New or used boat in the State of Illinois:

Simply put- when you are buying a boat, The State will place an additional 5% luxury tax on the boat over $200,000 via the ST-556 tax form. As a reference, Used boat sales have been subject to sales tax via the RUT-75 since 9/1/04. This is in effect if the boat was purchased through a dealer or private seller.

This new tax will most likely also effect boats bought outside of the state that are subject to Use tax per forms UT05-3.

If you are selling a boat, it may impact the resale value and sellability of your boat.

We fully understand that the State is in a precarious budget situation and is looking for additional revenue. This comes at a time when our state legislature needs to look inwards to clean up some of the waste and abuse of public funds. In the county of Cook, it further adds to the increased sales tax place on retail sales by the Cook County board. While it may effect a lower percentage of overall retail sales, the biggest question to ask of our state legislature is why? Why do it?

In 2008, the City of Chicago increased the Real Estate Transfer tax by a vote of 49-0 in the City Council. This tax increase was sold to the taxpayers as a way to shore up the city's $469M budget gap. The tax was assessed at a rate of $10.50 per thousand of home sale price on top of state and local county taxes. ( a net $12 per thousand for Chicago/Cook). The tax came at a horrible time for the real estate market and it can be argued, served to further slow the sales of homes and negatively impact residual value by the sellers. When it was all said and done- The city still had a budget deficit and there was a selective tax in place moving forward. What did it solve?

This proposed tax has potential for similiar impact and effect. Cook County has taken it upon themselves to further tax residents at the retail level and property taxes. Yet, they have not looked inwards for solutions represented through budget cuts and/or reductions in spending. The proposed tax comes at a time when retail sales are already impacted by the poor economic conditions. The general mindset that singling out a specific subset of our population (boaters) during these times has potential to worsten economic conditions on many levels. As a retailer, it may further impact sales on the new and used market, stiffling any economic progress. As sailors, it effects all on the purchase or sale of a boat. Think of it this way, if a buyer knows that they have to pay more for your boat because of taxes, will it effect the resalability of your boat?

Regardless of political idealogies, the trend of hyper taxation and selective taxation during these economic times can have negative short-term and long-term effects. As our city seeks to showcase our greatest asset (Lake Michigan) in search of the Chicago 2016 bid- it has ramifications for the boating community. A community that will be asked to play a vital part in the city's plans for the waterfront activities. As Illinois Taxpayers, why must the boaters be singled out in this? As Cook County taxpayers- where does it stop?

As a small business owner, I ask- why place additional pressure in an already trying economy for business people? Retailers have been impacted by all of the other factors effecting us as citizens today? The credit crunch and sluggish consumer confidence are key examples of factors troubling small businesses accross the country.

Overlay the corruption with our elected officials on multiple levels and the only question you can really ask is when is enough enough?

I urge you all as sailors and members of the boating community to contact the state legislators involved and voice your opinion on this tax. Your silence will further prove to them, that they can continue to tax at will and not be held accountable for waste and excessive governmental spending.
The Revenue and Finance committee is as follows:

Chairperson :
John E. Bradley (D-Marion, IL) 117th District

Vice-Chairperson :
Frank J. Mautino (D-Spring Valley, IL) 76th District

Bob Biggins (R-Elmhurst IL) 41st District, Sales Tax Sub-committee member

Suzanne Bassi (R-Palatine, IL) 54th District*

Mark H. Beaubien, Jr. (R-Waukonda, IL) 52nd District

Linda Chapa LaVia (D- Aurora, IL) 83rd District

Barbara Flynn Currie (D-Chicago, IL) 25th District*, Majority Leader

Roger L. Eddy (R-Hutsonville, IL) 109th District

LaShawn K. Ford (D-Chicago, IL) 8th District*

Careen M Gordon (D Coal City, IL) 75th District, Sales Tax Sub-committee Member

Ed Sullivan, Jr. (R-Mundelein, IL) 51st District

Arthur L. Turner (D-Chicago, IL) 9th District* Deputy Majority Leader , Sales Tax Sub-committee chair

Michael J. Zalewski (D-Summit, IL) 21st District*

* (Cook County)

Get Involved Write your Legislator

Useful Resources:

  1. Illinois General Assembly- HB0451

  2. Illinois Department of Natural Resources- Watercraft Registration

  3. Illinois Department of Revenue- Tax Explanations

  4. Officials unanimous on transfer tax hike- Chicago Tribune 5/13/08

Thursday, February 19, 2009

Picture of the Week: February 16, 2009

Magnus Woxen hangs on aboard Ericcson 3 (Gustav/Morin-Ericcson 3/ Volvo Ocean Race)

I nicknamed this week's picture of the Week "Whiplash" You can clearly see the speeds reached by the Volvo Open 70 boats in the VOR. Magnus Woxen is well braced on the lows side aboard Ericcson 3 as the water just whizzes by. Catch more of the Volvo Ocean Race Action at

Thursday, February 12, 2009

Picture of the Week: February 9,2009

Photo Credit: Rick Tomlinson/Volvo Ocean Race
Ericsson 4 extends their lead in the Volvo Ocean Race by finishing first in the In-Port race in Qingdao

This week's Picture of the Week is from the Volvo Ocean Race. As if the long distance legs weren't enough, once they reach port, the boats compete in the 'in port' races which allow the teams to pick up points on their competition racing around buoys. This photo provides you with a 'bird's eye view' of the bow of one of these massive Volvo Open 70 boats. Take a virtual tour of the VO70s by clicking on this link: Virtual Tour.

Beneteau 31- Best Family Cruiser

Beneteau 31 Main Salon

Sail Recently announced their European Boats of the Year. Their recipient of the 'Best Family Cruiser' category was the Beneteau 31 (known as the Beneteau Oceanis 31 in Europe).

Entering at a size that is traditionally considered optimum for a 'starter boat', the "31" is rich in features that are afforded to the larger boats in the Beneteau Series.

Karma Yacht Sales currently has a Beneteau 31 in stock. Give us a call to set up some time to see what everyone is talking about.

Enclosed is the article :

European Yachts of the Year - judged on fitness for purpose

Thinking of embarking on a yacht purchase? Sail-World Cruising brings you the European Yachts of the Year for 2009. They were judged by a panel of journalists from some of Europe's leading sailing magazines. The criteria for the judging centred around six main points:

  • Sailing performance
  • Comfort
  • Construction
  • Quality Design
  • Outstanding technical features
  • Value for money

The winners were announced at the beginning of this year's Dusseldorf International Boat Show in Germany.

A new aspect for this year's judging procedure was the recategorisation of contenders. Instead of merely categorising boats by their length, this year they were categorised by their concept and purpose. This means that you are seeing here below the yachts which were judged on their ability to meet your needs, no matter whether they are for crossing oceans, day sailing, or lazy family comfort.

This year's winners were as follows:

European Yacht of the Year

  • Best Family Cruiser: Bénéteau's Océanis 31
  • Best Performance Cruiser: Arcona 430
  • Best Luxury Cruiser: X-Yachts' XC 45
  • Best Special Yacht: Saffier 26

Oceanis 31 design -

.. . Best Family Cruiser: Bénéteau's Océanis 31 As the range entry model, the Océanis 31 bears a strong family resemblance to its larger siblings by combining elegance with ingenuity for maximum cruising pleasure. It was designed by Finot Conq et associes, with the interior layout and design by Nauta Design. At just 9.66 metres it seeks to fill a gap in the market for family cruising. For more information about the Beneteau Oceanis 31.

To View The Cruising World Video tour of the Benteau 31

To Visit the Beneteau USA link on the Beneteau 31

Saturday, February 7, 2009

22 New Fans of Sailing

My daughter Samantha was turning 6 and so it was time for her ‘superstar’ week at kindergarten. Superstar week is special every day for the child, with different treats and activities all week, and the week finished up with her able to bring in someone to ‘show and tell’ to her class. Well, she wanted her whole family to come In to visit her class. She also wanted me to do a show-and-tell that was all about sailboats.

So there I was sitting in front of 22 little kids, all of them staring at me, listening intently and being very polite by raising their hands before speaking. I had a model sailboat as a prop and I started my talk by asking how many of them had ever been on a sailboat? A few hands went up, so I followed up by asking those with their hands up to say something about those specific experiences. In reality most of them, it turns out, had either been on a power boat, or had only seen a sailboat and not really been on one.

So I started out by telling them how a sailboat works. Nearly all of them were aware that it is propelled by the wind, that a sailboat ‘tips over’, and many of them also knew that the keel is what helps to keep the sailboat upright. These things surprised me, as they were much more knowledgeable than I had given them credit for being. Then my daughter told the class that I have done the MAC Race, which led the children to ask what that was. So I showed them a large chart of Lake Michigan (most of them recognized the lake, and also knew where Chicago was on that chart). I then began to tell them about the Race to Mackinac each year, and how 300 boats race, using only the wind to go from one end to the other, and that they are all racing to the same place (one child asked if there were stop signs to keep people from bumping into each other).

The idea that all these sailboats were all heading somewhere at the same time going to the same place using only the wind to get there generated a bunch of oohs and aahs. After talking about the race, I told them that a lot of people also take vacations on their boats, and that some people even live on their boats. We then talked about what the inside of a sailboat looks like, and I showed them pictures that let them see how it is like a small house with a kitchen, bathroom, and bedrooms. Most of these children were very surprised to learn that a sailboat was that nice inside, and suddenly they all wanted to go on one (one girl asked me if I had brought a big boat with me; another said the boat was nicer than his house).

What struck me was the realization that right then -that exact moment-I was given a great opportunity to create a positive perception of sailing, and maybe plant a seed that would end up with one of them winning their own MAC Race someday, or representing the USA Sailing Team here in the 2016 Olympics. Luckily, with my own children I will have many other moments like this in upcoming years. Moments where what I say, tell, and do will maybe help create big ideas and dreams that will take root in them. Right now their world is full of nothing but possibilities, with relatively no boundaries or limits to what they can achieve. I hope that my 20 minute talk caused most of these children to have positive thoughts and ideas about sailing and sailboats and its possible place in their futures.

It is us who are responsible for creating the next generation of sailors, for growing the sport, and helping pave a path for others to discover it. Sailing was not very accessible to me while I was growing up, and my main image of it was that it was only for 'rich' people, and that you could get sick easy. Obviously my reality of it today is much different than what I grew up believing. Sailing deserves a better image than that, and it will need it if it is going to attract new blood (young or old) and diversity. At the end of my presentation, I asked: “After learning about sailing and sailboats, how they work and how much fun they are, how many of you want to go sailing on a boat?” Every hand in the room shot up (even their teacher’s hand went up). That tells me that it’s never too early (or late) to create involvement, interest, and new sailors.

Thursday, February 5, 2009

The Changing World of Boatbuilding and Sales

Last week I wrote about the new definition of value and how the current boat market is effecting the priorities for choosing a boat to buy. Our fellow Beneteau and Alerion Express dealer in Lake Erie, Don Finkle, recently wrote a piece on the dynamic landscape of boatbuilding and sales (see below). I thought I would share this with our customers and prospects on Lake Michigan as it imparts Don's many, many years of experience as a stocking boat dealer. More importantly it provides perspective on why it is a great time to buy a boat.

As a country, it seems as though we are currently stuck in 'neutral'. It seems as though we are waiting for our governmental leaders to provide a solution for us that will compel the move to 'drive'. This hesitation is continuing to feed the spiral of our nation's economy. As Americans we need to declare 'enough' and set the wheels of progress in motion.

The secret is within each of us.


The Changing World of Boatbuilding and Sales

by Don Finkle

The public does not really understand how precarious the life of most boatbuilders really is. I can recall some years back when Edson, manufacturers of steering systems and other parts used in sailboats, sent us a letter. They listed all of the boatbuilders that they used to supply to that were no longer operating. There were three full columns of names, single-spaced, that filled an entire sheet of paper. Once-respected names like Cal, Ranger, O'Day, Cape Dory, Bristol, Pearson, Ericson, Islander, Columbia, Hughes, Olympic, Tanzer, and on and on. The list was sobering. All gone. Since that time there are many more that have disappeared. And that was long before the current economic slowdown.

As a dealer, the financial strength of our builders is extremely important to us. We want them to be around to provide warranty service, parts, and to maintain the prominence of the brand so that our customers' boats have good resale (and trade-in) value. This is why you don't see RCR taking on every new model that comes along, no matter how appealing it might seem at first. How many times have you seen ads for boats that never ended up being built, or that went away after one or two years? Race boats are especially prone to plummeting resale value. The market is small to begin with, and unless a one-design class is established they are tossed aside for the next newer, flashier, faster design.

Sailors are conservative by nature, at least when it comes to buying boats. They may get excited at the boatshow when they see the new "Speedo 35", but then the reality sinks in of what it will be like to own one, try to gets parts and support, and then someday hope to sell it. Even the very well-healed have slowed down their penchant for going after the "latest and greatest".

You have no doubt noticed that there are few North American builders anymore. The foreign builders come and go with the currency exchange rate, the world market, and other factors. They have their own problems that in some ways are worse because of labor laws in their more socialistic countries. We have had our tailfeathers burned in the past by trying that route, which is why we stick to Beneteau. They are the World's largest sailboat builder, and most importantly they build most of the boats for our market right here in the US, in Marion, SC. Groupe Beneteau is a publicly listed company that has great financial strength that is there for all to see. Their boats enjoy solid resale for a variety of reasons: terrific value package, top-name designers, dual-purpose for long useful life, great brand recognition, well made and extensively outfitted. We do our homework so when we sell you a boat it is because we truly believe in it.

Our builders have come up with their own economic stimulus programs and they are immediate and substantial. The details vary by manufacturer, but the results are the same…you will save enough money to make it worthwhile buying now. We know and you know and they know that most people are sitting on their hands because of the fear that is being promoted every day. Most people are just as capable of buying a boat today as they were a year ago, but are less comfortable in doing so now because of the uncertain future. However, the builders and dealers are combining to make it possible to buy a boat at a price that makes it unlikely you will lose when you want or need to sell it down the road. Thus you can still enjoy sailing without the worry that you are doing something crazy and jeopardizing your future.

There is a big reason why we are all trying to stimulate sales now as opposed to later. You have heard about the banking sector tightening lending, and that tightening has affected businesses more than consumers. It is much easier for us to get you a retail boat loan than it is for us to get wholesale financing for our inventory. The landscape is changing, and in the future dealers will carry much less inventory than we have in the past. This a fact widely acknowledged in the boating and banking industries.

We need to sell what we have in stock, and the builders know that they have no hope of selling any of us a boat until we sell what we already have. This adds up to selling off whatever is in stock, and dealers and builders are in this together, working to make it happen. Once we sell off what we have, most boats will be ordered only when we have a customer for them. At that time we will no longer be "dumping" and the prices will not be what they are now. Simply put, we cannot make a living selling boats at the prices of these left-overs, so this pricing strategy is short-term. We see no reason for smoke and mirrors, no BS, this is the way it is. These are the facts, plain and simple.

Those who are in a position to take advantage by buying one of these in-stock boats will get a deal they have not seen before or probably will not see again. Keep in mind that the discounts are shared by the builders and the dealers, so when they stop kicking in there is no way we can match these later. If you are looking for a boat that we don't have, one of our dealer friends will have one and we'll get it from them. The rest of the good news is that you will still get the good service to go with the sale, and these boats are all terrific products. The fact that boat sales are slow has nothing to do with the boats themselves, simply the result of external forces. We just sold a new Beneteau First 10R to friends who jumped on a great deal, now it is up to you!

Picture of the Week: February 2, 2009

05/02/2009 - Auckland (NZL) - Louis Vuitton Pacific Series - Racing Day 5 - Round Robin 2005/02/2009 - Auckland (NZL) - Louis Vuitton Pacific Series - Racing Day 4 - Round Robin 2 BMW Oracle Racing © Photo Gilles Martin-Raget

This week's Picture of the Week is from the Louis Vuitton Pacific Series. If you've ever wondered just how big the sails on the AC boats are, this picture puts things in perspective. So how would you like to be one of the crew that has to douse that kite?