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