Louisiana enacts sales tax break on luxury boats

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While standing on the deck of a friend’s yacht last week in Bermuda, Gov. Jeff Landry praised a new Louisiana tax break on boat purchases in a short video he shared to social media.

“Louisiana’s been known as a sportsman’s paradise, but it’s not always treated our sportsmen friendly,” Landry said in the recording posted July 3.

“This year, we made Louisiana sportsman-friendly by capping the amount of taxes you pay when you buy you a new boat or register your boat in Louisiana,” the governor said as the wake of the multimillion-dollar vessel churned behind him.

What the governor didn’t mention is the tax break, which took effect July 1, only applies to boats worth $200,000 or more.

The yacht owner hosting Landry, Shane Guidry, is the governor’s close friend, political adviser and top campaign donor. Guidry told the Illuminator he personally suggested the tax break for luxury boats to the governor.

“I recommended to him a year ago that he should look at them,” he said in a phone interview from the 82-foot Viking yacht he took to Bermuda this month.

Guidry said he owns nine fishing and pleasure boats, including three yachts he estimated are worth a combined $50 million.

He is the head of Harvey Gulf International Marine, a billion-dollar marine transportation company that services the offshore energy sector. The business is based in New Orleans, but Guidry also spends several weeks a year on his passion project: Team Harvey Fishing, which competes in international tournaments for prize money.

A Metairie resident, Guidry registered his yachts in Palm Beach, Florida, where boat taxes were, until this month, far lower. Louisiana’s new tax break should entice high-end boat owners to register their watercraft locally, he said, resulting in more tax revenue for Louisiana.

“Something is better than getting zero,” he said.

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The governor’s office declined to answer a question about whether the idea for the tax break came from Guidry.

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In June, the Louisiana Legislature approved a cap of $20,000 on local and state sales taxes applied to boats as long as the taxes are paid within 90 days of a boat’s purchase. The provision was part of a larger omnibus bill sponsored by Rep. Julie Emerson, R-Carencro, that included several other, unrelated tax changes.

The cap will only benefit more expensive boats because the average combined local and state sales tax in Louisiana is 10% – or the equivalent of $20,000 on a $200,000 purchase. This limit will increase in the future; the law requires the $20,000 threshold to be adjusted for inflation every five years starting in 2030.

The break applies to purchases of personal boats and those tourist and fishing charter companies use. Commercial shrimpers and fishers won’t see any benefits because their boats are already exempt from sales tax.

State Revenue Secretary Richard Nelson said the change is meant to encourage Louisiana residents with pricier boats to bring them back home, as Guidry suggested. Many luxury boat owners register in other states to avoid Louisiana’s high taxes, Nelson said.

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Charter fishing tour operator Adam Peterson said he believes the tax break will be a boon for his industry. Many people who offer charter experiences lease their vessels from independent owners, but the tax break should result in fewer expenses for the charter companies, he said.

“Whenever we have to re-register , we are going to register it in Louisiana,” said Peterson who owns Gulf of America Outfitters, which runs fishing charters out of Venice, Port Fourchon and Lake Charles.

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“[b]I don’t necessarily blame the boat owners for seeking an exemption, but the better long-term solution is to have a lower sales tax with a broader base,” said Steven Procopio, president of the Public Affairs Research Council of Louisiana, which studies state fiscal policies.

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