YACHT LIFE MARCH 31, 2015 10:34 AM
New York Lawmakers Carve Out Sales-Tax Exemption for Struggling Yacht Buyers
By Spencer Platt/Getty Images
Those looking to purchase yachts can rest knowing that the folks in Albany are thinking of them.
BY KIA MAKARECHI
A version of New York’s state budget includes a major sales-tax exemption on yacht purchases. That means those who pony up for boats over $230,000 would only pay taxes on the first $230,000, regardless of how much higher the price of the yacht climbs.
As Capital New York notes, the measure echoes one that appeared in the never-introduced and so-called “budget clean-up” bill that was being discussed last year.
Given that the measure might lubricate the yacht economy, VF.com reached out to both private and New York City docks and marinas to find out whether there are many vacant docks in the city. An employee who answered the phone at the Parks Department said there’s a “five- or six-year waiting list” for permanent docks at Manhattan’s Riverside Park marina.
In lower Manhattan, a picturesque marina in Battery Park City is privately operated by Brookfield Property Partners, the company that has worked to create a family-friendly indoor mall and food court in the area. Brookfield has partnered with Island Global Yachting to handle activity at the docks. The employee who answered the phone at Island Global was not authorized to speak to the press, but said she would forward VF.com’s inquiry. A spokeswoman for Brookfield told Capital New York the measure would not impact Brookfield’s business.
Andrew Farkas, a billionaire who owns both Island Global Yachting and Island Capital Group, happens to have a long history with New York governor Andrew Cuomo. A decade ago, Cuomo was an employee at Island Capital Group, where he made more than $1 million a year advising Farkas, according to The Wall Street Journal. Farkas served as Cuomo’s finance chairman for both of his gubernatorial races, and Farkas and related parties have donated more than $1 million to Cuomo’s political efforts, Crain’s New York reported.
The current yacht sales-tax carve-out wasn’t included in Cuomo’s original budget, but originated in both houses of the state legislature. It landed in the final budget, meaning that, at the least, Cuomo wasn’t too heavily opposed to the measure.
Critics point out the obvious: New Yorkers in a position to purchase a $230,000 yacht probably don’t need government exemptions. “The ironic part is that your average Joe in New York who wants to go out and buy a small 16-foot bass fishing boat for his own personal use will actually pay sales tax, but someone going out and buying a yacht isn’t going to be subject to the same tax,” Ron Deutsch, the executive director of the Fiscal Policy Institute, told Capital New York.
New York Senate majority leader Dean Skelos defended the bill as a job-creating measure, saying that it would benefit everyone from yacht owners to marina owners and operators. This isn’t the first time the yacht industry, which, like many luxury markets, took a hit during the recession, has been positioned as a world of benevolence. Think of it as the trickliest of trickledown economics.