The government’s removal of customs duty on pleasure vessels will greatly benefit the country as a whole, President of Harbourside Marine Ian Rademaker said yesterday.
The opposition on Sunday criticized the government for giving further tax breaks to the well off while asking “pensioners to pay VAT [value-added tax] on medicine and single parents to pay VAT on baby supplies”.
Rademaker’s business is one of the largest and few remaining boat retailers on New Providence. He said while there are often many large luxury boats in The Bahamas, hardly any are purchased locally because of the heavy taxes. He said removing the ten percent duty would make purchasing a large boat in The Bahamas more attractive for high net-worth individuals.
“I would think that the net outcome of this is going to greatly benefit the country. Understand, even the ten percent VAT is still high for boats, considering in Florida they’re capped at $18,000, but I think that persons that live here or live here part time will actually go and register their boats and pay the ten percent, versus not paying anything,” Rademaker told Guardian Business.
“So, for recreational, because of the higher import duty and VAT, we don’t sell very many large boats. We sell a handful of recreational boats, like 17-21 foot and we may sell five a year. We sell more boats to commercial fishermen, which are bare-bones 17- to 25-foot boats, but they’re boats that we bring in from Columbia and we might sell five to ten of those per year. So our boat sales are not huge. But there are a lot of boats coming in from Florida, so it’s not a huge industry for us, we sell a lot more motors and do repowers but we are not huge in boat sales. Big boats, we don’t sell any. I’m lucky to sell one every two to three years.”
Rademaker said with more attractive taxes, he’d be more inclined to expand his offerings to include bigger, more desired boats.
“I think so because what would happen is people will know they can buy the big boats from us and have duty and VAT paid at a certain price, which makes me a little more competitive. When you’re talking about a $300,000, $400,000, $500,000 boat, it makes a huge difference,” he said.
Rademaker continued, “Basically right now the duty on boats and pleasure craft is ten percent plus ten percent VAT and a lot of boats that are coming into The Bahamas, some of these boats are costing anywhere from $300,000 and up. For example, a 39-foot new Contender, that would cost me $600,000 now, the price of boats has gone up tremendously over the past couple of years. But when you talk about paying duty and VAT on this boat, you’re talking about 20 percent. For instance, on a $500,000 boat, you’re paying $100,000 [in taxes]. If you buy a boat in the United States, it’s basically a six percent sales tax and it’s capped at $18,000. So, the maximum tax you’re going to pay on a vessel over there is $18,000.”
For years, mariners have lamented the high taxes on boats. As a result, local and foreign boaters and yachters have chosen to purchase their vessels overseas, only to sail them to The Bahamas for a minimal fee.
“What’s been happening over the years, is that customers won’t buy a boat through someone like me. They end up buying a boat in Florida and registering it there, and then they just bring the boats in on cruising permits, and that only costs a couple hundred dollars. So, I think what the government is trying to achieve is to try and bring this down a little bit and I think as a result, customers would register their boats in The Bahamas if it was just ten percent VAT. It’s certainly more expensive than the United States, but with the 20 percent we’re seeing people buying more expensive boats and registering them in the United States and bringing them in on cruising permits; or they are registering them in Delaware with a company and then still bringing them in on permits,” Rademaker said.
“A lot of these expensive boats that they bring into The Bahamas, when they go to sell the boats they sell them in Florida, because there is not a huge market for high-priced boats over here. So I think what the government is trying to achieve is to get those boats registered in The Bahamas.
“And a lot of these boats that come into The Bahamas, some of them go back to Florida, some go to Europe and I don’t think anywhere else they are paying 20 percent. So that’s the problem, a lot them are in transport, they’re not always just staying in The Bahamas.”