Many boat owners, weary of the exorbitant taxes charged by South Carolina counties, would rather register their vessels in bordering counties with lower tax rates than fork over the 10.5 percent assessment charged by Beaufort County. The new law sponsored by Sen. Scott Richardson, R-Hilton Head Island, could generate as much as $1 million in property tax revenue, according to county Auditor Sharon Burris. That revenue, Richardson claims, would ease other local property taxes.
The measure is flawed because it stops short of solving the real problem of inflated boat taxes: Boat owners register their boats in Georgia or North Carolina, where the rates are cheaper, or in Florida where there is no personal property tax.
We all must pay our taxes and be law-abiding citizens, but unfortunately the inequitable taxes and a lack of any kind of enforcement has driven away boat owners and left a chunky deficit in the tax money that could have been realized had a more moderate tax been applied. While the image of million-dollar yachts bobbing in Harbour Town's exclusive marina may be what springs to mind, do not forget the small family motorboats, sailboats and fishing skiffs that ply the waters each day or weekend. The bulk of these boat owners do not own Harbour Town houses.
Most boaters and harbormasters know that the high tax rates will only encourage more people to register their boats in other states to shirk having to pay the high local taxes. Under state law, S.C. boats must be taxed based on where they were kept as of Dec. 31 of the previous year. But the law doesn't address the period of time a boat is in the state to be considered taxable. In either case, boaters will continue to shift their moorings to stay a step ahead of the taxman or keep them on trailers.
The measure actually could cause a greater loss of property taxes than a gain, as Burris predicts.
Richardson should be aware that the revenue-loss potential exists. The senator said Thursday that he wanted to see the assessment ratio on boats cut from 10.5 percent to 4 percent and the total tax payment capped at about $5,000. Before the legislature passed the measure to allow marinas to open their guest books to county auditors the bill's language should include a tax reduction (and not, by any stretch, a cap) to make the measure more attractive. Richardson endorsed a similar bill that was stuck in a committee this year that would have allowed counties to lower tax rates for boats that qualify as second homes through the Internal Revenue Service to 6 percent instead of the current 10.5 percent. The House version of the same bill would have mandated that counties lower the tax rate and cap those tax bills at $1,500.
Pushing for lower, more competitive tax rates would keep South Carolina boaters from registering out of state and help fill state coffers. State legislators should make the measure a priority in the next session.