Bush Will Try to Kill Luxury Tax on Yachts

WASHINGTON —  President Bush plans to ask Congress on Tuesday to repeal the luxury tax on yachts that lawmakers enacted in late 1990 and may seek to end similar levies on private aircraft, automobiles, jewelry and furs, White House officials and lawmakers said Sunday.

The White House is expected to portray the move as a bid to help restore jobs. Yacht builders have reported that their sales have fallen off sharply since the tax was enacted, and manufacturers of luxury automobiles have voiced similar complaints.

The plan to seek repeal of the tax on yachts was confirmed by Samuel K. Skinner, the new White House chief of staff, during an appearance on ABC-TV’s “This Week With David Brinkley,” and by Senate Minority Leader Bob Dole (R-Kan.), on CBS-TV’s “Face the Nation.”

It was not immediately clear whether Bush also would go ahead with a request to roll back the taxes on the four other luxury items, but Dole suggested that the proposal might include private aircraft and said that Congress may add the remaining three as well.

The move to repeal the luxury tax is expected to be among a spate of new measures that Bush plans to propose in his State of the Union address Tuesday as part of an election-year package designed to gain the initiative on domestic issues.

Bush also is considered likely to propose a doubling of the current $33 million in federal spending to control tuberculosis and a new public housing initiative that would enable tenants to remove apartment managers who were found to be ineffective.

Disclosure of the likely proposals Sunday marked the latest in a string of calculated leaks by Administration officials designed to build suspense before the Tuesday speech, which the White House is touting as a turning point in the Bush campaign.

Skinner said that he hoped the speech would inspire new confidence that would help spur the economic recovery. “. . . That’s (where) we’re going to begin on our effort, Tuesday night, to make sure it happens,” he told the television audience on Sunday.

The luxury tax--on yachts, automobiles, private aircraft, jewelry and furs--was pushed through by congressional Democrats as part of the autumn, 1990, budget accord between Congress and the White House and accepted reluctantly by Bush as a necessary price for the pact.

Although Democrats had intended the soak-the-rich levy as an “equity” measure, affected businesses claimed that it stunted sales of yachts, cars, private airplanes and other luxury goods, sparking plant shutdowns and layoffs.

Senate Majority Leader George J. Mitchell (D-Me.), who represents a state that has a sizable boat-building industry, already has made a speech on the Senate floor saying that he would support a proposal to repeal the luxury tax on yachts.

“The welfare of luxury boat buyers is not our concern,” he said. “Rather, our concern is the well-being of the many thousands of Americans who work in the boat manufacturing and sales industry.”

The luxury tax on yachts requires boat buyers to pay a 10% extra federal sales tax on that part of the purchase over $100,000. But boat sales dropped sharply and revenues from the levy have been far smaller than expected.

Separately, Mitchell, who appeared with Dole on “Face the Nation,” said that Democrats may agree to vote for an expected Bush proposal to cut the tax rate on capital gains if it is part of a balanced package of broader tax changes.

Mitchell’s comments paralleled a similar view offered Thursday by House Speaker Thomas S. Foley (D-Wash.). Democrats generally had opposed such a move a year ago. Capital gains are the profits from the sale of stocks or other assets.

The New York Times first reported the luxury tax proposal Sunday. It also said that Bush plans to propose substantial increases in public health and child welfare programs.

The newspaper said that the measures were likely to include an 18% boost in childhood immunization funds, to $349 million; an 18% rise, to $9.4 million, in monies to combat infant mortality; and a 9% jump, to $2.8 billion, in aid to poor women, infants and children.

Also on tap are proposals for a 15% increase, to $684 million, in funds for community health centers; a 19% increase, to $120 million, for the National Health Service Corps, which assigns physicians to work in rural and inner-city areas.

The proposed change in tenants’ rights laws for public housing units reportedly would enable project dwellers to vote to transfer control of these units to new managers if the old ones have allowed the buildings to deteriorate excessively.

The move has been advocated by Housing and Urban Development Secretary Jack Kemp as part of a move to “empower” project dwellers to encourage them to take better care of their facilities.