In the face of a daunting $27 billion dollar budget shortfall, a Texas bill that would give huge tax breaks for large yachts, has been green-lighted by a House committee. The decision comes as the “Lone Star State” faces scores of teacher-layoffs, and deep cuts to education and social services like medicare and medicaid.
House Bill 2187’s original text would cap the amount of tax paid on any sale of a yacht at $15,625, roughly the amount paid for a $250,000 vessel. This means sales of yachts with price tags in the high hundreds of thousands or even millions wouldn’t be subject to more tax, although the figure has been raised to $18,000 in order to match the figure neighboring Florida employs.
Republican State Rep. John Davis, who introduced the bill, argues that it’s necessary in order to gain back the boating business Texas is currently losing to nearby competitor Florida as a result of its sales tax limit. “We’re losing a lot of downstream jobs and sales tax revenue,” Davis is reported as saying, in a San Antonio Express News article.
But the state stands to lose too; the bill’s original fiscal analysis shows Texas as being out an extra 1.4 million in tax revenue annually, and at a time when billions are being cut in public school funding and social services, many see it as the wrong choice. In an article in the Houston Chronicle, Texas State Teachers Association spokesman Clay Robison called the bill “an absurd step in the wrong direction,” and said that with these education cuts “within a few years, fewer and fewer people will qualify for jobs that pay enough for anyone to even think about purchasing a yacht.”
Rep. Davis argues that the bill would keep yachts in Texas apart from just purchase, boosting other boat-related economic activity within the state-lines, things like repairs and slip fees. However, Democratic State Rep. Mike Villareal, one of the committee members who voted against the bill, and who also serves on the appropriations committee charged with budget cuts, disagrees. In a bitingly sarcastic response reported by The San Antonio Express, Villareal asks Davis if he’s “considered turning this into an omnibus bill, and including limousines and fur coats and other luxury items? Because you know, we haven’t cut education enough this session, and there apparently aren’t enough nursing homes on the verge to close. What else can we do to bleed the state?”
The next step for the bill is to pass the full state house, and The Houston Chronicle says that Davis and his allies are optimistic about the outlook. However, as of last week, Davis hadn’t found a Senate sponsor.