JCC Creates Boat Tax Committee

By Desiree Parker Thursday, December 22, 2011

James City County established a committee to examine local boat taxes after the Commissioner of the Revenue noted some concerns last month; the committee met for the first time this week.

In order to collect taxes on local boats, the county asks marinas to indicate how many boats are docked on January 1. Commissioner of the Revenue Richard Bradshaw recently received a tip that some boat owners with boats docked at the Governor’s Land marina left before the counting took place. In order to get a better idea of where boat owners are housing their boats, Bradshaw’s office sent a letter out to county boat owners in November to get more information and find out where they keep their boats and in what locality they are paying these taxes.

The issue was brought to the attention of the Board of Supervisors (read a previous story here), who heard from a few boat owners and citizens on the issue. The Board decided to put together a committee to examine the local boat tax as well as boat taxes in surrounding localities, and then come up with a recommendation on whether to keep or change the tax rate.

The committee has nine members, which includes the county’s Economic Development Director Russell Seymour as well as local citizens, Governor’s Land residents, other county marina employees and people with a stake in the discussion. One member, President of the Two Rivers country club at Governor’s Land Jake Kirchner, took time out to talk with WYDaily about the boat tax issue and what the committee will be working on in the coming weeks.

The issue is important to the country club because “the marina for us is a pretty important economic activity,” Kirchner explains. About 30 to 40 percent of members are from outside the community, he says.

The current boat tax rate is somewhat complicated in the county. The tax charged is four percent of 50 percent of the value of the boat (so the tax for a boat worth $100,000 would be four percent of $50,000). The value is depreciated by 10 percent every year, so the tax decreases over the life of the boat.

Many local boat owners keep their boats in other jurisdictions, Kirchner says, because other places such as Deltaville, Gloucester and Virginia Beach have lower tax rates. Hampton, he notes, charges no boat tax and therefore boaters flock to the area.

“If we had a competitive tax rate so people who live here were motivated to keep their boats here and others would bring boats here, that would be a real benefit,” Kirchner believes. “We need a tax rate that promotes business.”

The committee will be looking closely at boat tax rates for various surrounding jurisdictions along with the economic impact of these rates, according to Kirchner. The Virginia Institute of Marine Science did a study for Hampton not long ago analyzing the impact of having no tax rate, and this is something the committee will be looking at in the coming weeks.

Generally, the study found that Hampton has about $50 million in economic activity thanks to boaters and that it wasn’t worth adding a tax, Kirchner says.

The committee will also look at some figures from Williams and Mary and do what they can to come up with “a good [new tax] number to recommend to the Board,” if the numbers indicate a change is a good idea, he says.

Should the committee propose any new tax rate, “we would need to prove it’s no worse than neutral [to revenues]” overall. Reducing the rate could bring in more boaters, which could still bring in a roughly similar amount.

Residents who pay real estate taxes, Kirchner points out, receive many services that are paid for with tax revenues. As far as boat taxes go – which are higher than real estate taxes – “what do boaters get for that?” he asks.

In the meanwhile, The Two Rivers country club (which runs the marina) has encouraged its boaters to fill out the questionnaire from the county promptly while the committee continues its work, according to Kirchner.

Seymour agrees that the committee first of all wants to “get a good picture of what surrounding locations are doing [with boat taxes], and not just those next door.” Then the group will decide on a proposal it feels is fair.

As the liaison for the county, Seymour says he will be thinking about what is best “not just for citizens and the county, but also from an economic development standpoint,” that is, what might be good for businesses that operate marinas, for example.

The committee expects to bring a recommendation to the board sometime in early spring.