Gov. Christie on Wednesday signed into law legislation that cuts sales and use taxes on purchases of recreational boats by 50 percent, a move supporters said would spur economic growth.
The law also sets a $20,000 cap on sales tax imposed on such purchases, and provides a 30-day grace period during which a tax will not be levied on the use of such boats in the state.
About 150,000 recreational vessels are registered in New Jersey, down by 100,000 over the past 15 years, according to the state's Marine Trades Association. They include sailboats, motorboats, yachts, and other noncommercial boats.
"Over the years, consumers were attracted to more competitive tax systems in other states, resulting in a significant decrease in registered boats purchased and docked in our state. This naturally caused a decrease in revenue for New Jersey and devastated the boat manufacturing industry," State Sen. Jim Whelan (D., Atlantic) said in a statement.
"I am confident that this law will give rise to an increase in boats purchased and docked in New Jersey, which will in turn boost revenue for our state's economy."
The nonpartisan Office of Legislative Services projects that the state will lose at least $8 million a year because of the 50 percent sales and use tax exemption. That could increase to as much as $15 million in lost revenue annually if sales return to prerecession peaks, according to OLS.
Jon Whiten, deputy director of the liberal-leaning New Jersey Policy Perspective, said the law showed lawmakers had the wrong priorities.
"New Jersey's working families are constantly told by folks in Trenton that there's not enough money to meet our growing needs," such as food assistance to low-income seniors or school breakfast for children, Whiten said.
The boat tax break "clearly shows that the issue is not whether there's enough money, but how - and on whom - lawmakers choose to spend it," he said.
The legislation was drafted to grant tax breaks to those who purchase high-end vessels such as yachts. Christie, a Republican, vetoed the bill and returned it to the Legislature with the recommendation that purchases of all recreational boats be exempt from 50 percent of the sales and use tax.
His version passed with near-unanimous support.
Melissa Danko, executive director of the Marine Trades Association of New Jersey, said the industry had struggled since the recession and Hurricane Sandy. States like Florida and New York also have sales tax caps, she said, and Delaware has no sales tax.
The new law, she said, will help "to grow an industry that really, truly has been struggling."