Chief Patron: Lopez
Watercraft Sales Tax (language only)

Item 3-5.20 #2h

Language
Page 517, after line 43, insert:
"§ 3-5.20 SALES TAX ON WATERCRAFT
Notwithstanding § 58.1-1402, Code of Virginia, or any other provision of law, the sales tax rate applied to the sale of every watercraft sold in this Commonwealth, upon the use in this Commonwealth of any watercraft and upon the gross receipts from the lease, charter or other use of any watercraft by a registered dealer in this Commonwealth. The amount of the tax to be collected shall be determined by applying the following rate against the sale price, market value or gross receipts:
1. The sale price of each watercraft sold in the Commonwealth shall be taxed at the rate set out in § 58.1-603.
2. 4.3 percent of the sale price of each watercraft not sold in the Commonwealth but required to be titled in the Commonwealth. However, if the watercraft is first required to be titled in the Commonwealth six months or more after its acquisition, the tax shall be two percent of the market value of such watercraft at the time it is titled.
3. 4.3 percent of the gross receipts from the lease, charter or other use of any watercraft by a registered dealer.
No tax levied under subdivisions 1 and 2 of this section shall have no maximum cap.  However, a transaction taxed under subdivision 1 shall not be taxed under subdivision 2 or 3, nor shall the same transaction be taxed more than once under either subdivision 1, 2 or 3. Use of any watercraft by a registered dealer resulting in taxation under subdivision 3 shall not exempt any subsequent sale or use of such watercraft from being taxed under subdivision 1 or 2 if applicable."

Explanation
(This amendment eliminates the differential sales tax rate applied to watercraft by eliminating the 2.3% reduction in the state sales tax rate compared to the rate applied to other goods. By eliminating both the differential rate and the $2,000 cap, this would raise an additional $8.0 million in revenue to use for other core services in government. A companion amendment to Item 103 provides for the deposit of an equal amount to the Virginia Housing Trust Fund.)