Taking aim at a loophole

Assembly Speaker Fabian Núñez (D- Los Angeles) is expected to call on Assembly Republicans to vote on a bill today aimed at closing a tax loophole that allows yacht owners to avoid taxes by stowing their boats out of the state for 90 days.

Assemblyman Chuck DeVore was one of few Republican lawmakers in the Assembly to vote in favor of a similar version of the bill last week, which would have required people who buy private jets and large yachts and RVs to store the luxury items out of state for an entire year to avoid state sales and use taxes. The bill died without enough Republican support.

“It’s an issue of treating all Californians the same,” DeVore said. “The average Californian goes to a dealership to buy a car and they have to pay taxes. It is an unintentionally exploitation of tax code by people with savvy accountants who have found a way to get around the tax.”

? State Sen. Tom Harman, who voted against the Senate version of the bill last week, was one of many Republicans who view closing the loophole as a tax increase, an interpretation DeVore disagrees with.

“There are an awfully lot of boats in my district,” Harman said. “The bottom line is, it’s a tax increase and I’m against people paying more taxes.”

With lawmakers trying to plug an estimated $7.5-billion hole in the budget next fiscal year, changing the law would provide minimal, even merely symbolic relief.

Closing the loophole would generate an estimated $26 million dollars over this and the next fiscal year.

If approved, the new law could hurt local boat craftsmen if wealthy boating enthusiasts choose to keep their yachts out of state for a year to avoid taxes, said Len Bose, owner of Costa Mesa-based Len Bose Yacht Sales.

“I don’t necessarily know if it hurts the sale of new products, but it hurts the work underneath it — the work that it takes to produce a sail for example.”

Assemblyman Van Tran was one of seven Republican lawmakers who abstained from voting on the assembly bill last week.

Tran said he didn’t know enough on the issue to vote one way or another last week, but he is willing would to take another look at the bill.

“Usually when I abstain either I don’t have enough data, or it’s a soft no,” Tran said. “I definitely will be talking with different people to make a firm vote on it one way or another.”

Assemblyman Jim Silva, who voted against the Assembly version of the bill, said he didn’t have a personal interest in the loophole — he doesn’t own a yacht — but called it a crucial tax break for business in the area.

“By penalizing businesses and changing the rules, it’s going to cause a lot of people supported by work in the industry to lose their jobs,” he said. “I want to make sure we keep unemployment rates low in Orange County.”

California temporarily extended the period to avoid taxes from 90 days to one year in 2004. A 2006 impartial legislative analysis found that that tax revenue grew during this period and the negative economic effect of the extended waiting period was minimal.

BRIANNA BAILEY may be reached at (714) 966-4625 or at

brianna.bailey@latimes.com.