Space tourists should not get a tax-free ride in NM

Does this make sense? If you walk to the park, you’ve paid the state’s gross receipts tax on the pair of shoes you wear to get there. But if you want to get blasted into space from Spaceport America in southern New Mexico, it’s a tax-free ride.

Two lawmakers from opposite sides of the aisle introduced a bill to end a loophole that exempts human passengers from paying the GRT on their Virgin Galactic spaceflight tickets, which are priced at $450,000. But the bill was tabled 9-1 by the House Commerce and Economic Development Committee on Monday, effectively grounding the bill this session.

We hope state Rep. Jason Harper, R-Rio Rancho, and Matthew McQueen, D-Galisteo, will take another run at this bill in the future because it raises an important question of what constitutes sound tax policy in the state. As an incentive for growing the state’s “space industry,” New Mexico lawmakers exempted “payloads” launched from the state’s commercial spaceport from being subject to the state’s gross receipts tax. But they made no distinction between commercial and human cargo.

Virgin Galactic, the spaceport’s anchor tenant, has successfully pre-sold some 700 human spaceflights, and the bill’s fiscal note observed that “subjecting these ticket sales to GRT appears reasonable as the incentive is not needed to induce demand for flights. The current deduction, along with other incentives, have contributed to the development of space flight in New Mexico and the state and local economy can now benefit from recurring flight activity.” The bill, if passed, would have generated an estimated $3.7 million for state and local governments.

The Journal supported the initial exemptions on taxes; now it’s time to get a return on the investment.

“New Mexico taxpayers have paid $220 million for a spaceport and … about $4 million a year toward running the spaceport,” Harper said. “Charging sales tax for these tickets is not really asking that much in return.”

We concur and hope the Legislature revisits the issue in a future session.