SANTA FE, N.M. (KRQE) – Companies are receiving big tax incentives to set up shop at Spaceport America including Virgin Galactic, but a pair of lawmakers want to make sure passengers flying to space are paying a tax on their $450,000 tickets. Right now, companies don’t have to pay gross receipts taxes for anything related to launching or operating space vehicles. The state put space passengers under that umbrella.
“The Taxation and Revenue Department determined that people were payloads,” said Representative Matthew McQueen. Now Rep. McQueen and Jason Harper say those tickets should be taxed. They’re both sponsoring House Bill 72. Rep. McQueen says while Virgin Galactic does benefit from some tax breaks, the bill clarifies to Tax and Revenue Department and Virgin Galactic, that tickets are not exempt from gross receipts tax.
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In Sierra County, where Spaceport America is located, the tax rate is 6.9%, with most of that going to the state. That means if the bill passes, and Virgin Galactic continues charging passengers $450,000, the tax for each ticket would be about $31,000.
“It is a recreational activity,” said Rep. McQueen. “If you buy a ticket for an event in New Mexico you pay a gross receipt tax,” McQueen explained. “If you buy a ticket for a ski lift, you pay a gross receipt tax. If you go to the movies, you pay gross receipts tax.”
As of November, Virgin Galactic reported about 700 people had put down payments on tickets, many of them at the previous price of $250,000. If the bill passes, anyone who has purchased their ticket in full before the law goes into effect, won’t have to pay taxes. Starting next year, Virgin Galactic is hoping to make three space flights each month. Each flight carries four passengers.