New Mexico lawmakers propose taxing Virgin Galactic space flight tickets

New Mexico taxpayers have invested millions for the construction and operation of its commercial spaceport, for which the state has been promised returns in the form of high-paying aerospace jobs, related economic development and tourism.

What New Mexico does not get, however, is any tax revenue from sales of high-priced tickets to fly to space with Virgin Galactic, the spaceport’s anchor tenant.

A bipartisan bill introduced in the state Legislature seeks to close a loophole that excluded spaceflight passenger tickets from gross receipts taxes. The move aims to harvest revenue from ticket sales as Virgin Galactic prepares to begin regular commercial service later this year.

HB 72 would amend a statute that excludes receipts “from launching, operating or recovering space vehicles or payloads in New Mexico” from gross receipts taxes, clarifying that sales “for transporting any person into or near space” would be taxable.

Virgin Galactic ground crew waits for the pilots of the WhiteKnightTwo carrier aircraft to disembark after landing at Spaceport America on Thursday, August 15, 2019.

A 2019 ruling by the state Taxation and Revenue Department on the question of taxing flights to space essentially treated passengers as freight, stating: “… it seems reasonable to consider passenger revenues as receipts received for the operation of a space vehicle.”

“When those exemptions were drafted, it was not in anyone’s mind that people would be a payload,” state Rep. Jason Harper, R-Rio Rancho, told the Las Cruces Sun News. Harper is a co-sponsor of the bill.

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