Last week, the Washington State Department of Revenue held a hearing to finalize the watercraft excise tax depreciation schedule. The Department of Revenue proposed a final rule which reflected input from stakeholders in the marine industry and placed less of a financial burden on boat owners than the originally proposed excise tax schedule.
In June, MRAA joined regional and national groups, such as BoatUS, Recreational Boating Association of Washington, Northwest Marine Trade Association, Washington Retail Association, and Washington Maritime Federation, to challenge this proposal. Originally, the proposed depreciation schedule would have put an unfair burden on boat owners and did not reflect national averages. Furthermore, boats are the only recreational vehicle subject to a depreciation excise tax in Washington State, already placing an additional financial burden on boatowners.
The final rule, which will go into effect on October 1, 2021, reflects significant changes from the initially proposed watercraft excise tax depreciation schedule. MRAA supported the aforementioned coalition and others advocated that the intially proposed depreciation schedule did not accuratley portray depreciation rates of boats. The intial rule showed a Year 1 depreciation rate of either 2 or 3%, which does not match with nationally averaged boat depreciation rates that are closer to 10% after the first year. This higher-than-average estimate would have resulted in higher excise tax on boat owners.
“I would like to thank the Department of Revenue for working with stakeholders in the marine industry to create a final rule that reflects the concerns we raised,” said Chad Tokowicz government relations manager for the Marine Retailers Association of the Americas. “With more people on the water than ever and many more considering buying boats, it is imperative we do whatever we can to lower the financial burden on consumers.”
Under the newly proposed excise tax depreciation schedule rates have been adjusted with Year 1 depreciation rate for sailboats at 10%, 16% for powerboats under 30 feet, and 17% for powerboats over 30 feet. Despite the updated depreciation schedule reflecting concerns raised by the marine industry, MRAA and its partners will continue to work with the Department of Revenue as the Final rule still needs improvement concerning the depreciation rates for sailboats vs. powerboats and for older vessels (older than 14 years).
“This issue demonstrated, once again, the importance of trade and member associations,” said Peter Schrappen V.P. and director of government affairs for the Northwest Marine Trades Association. “The all-star team in place to advocate for boaters put together our case, the decision makers at the Department of Revenue listened and boaters and boating businesses won.”
The Department of Revenue has opened a public comment period on the final rule until September 10, 2021. MRAA said it will continue to support the aforementioned organizations to provide additional comments and continue advocating for the Marine industry and its consumers.