Bill in New Mexico would tax tickets to space on Virgin Galactic

New Mexico lawmakers are considering a bill that would tax tickets to space on the Virgin Galactic, The Associated Press reported. 

The bipartisan bill, introduced by the state’s legislature, seeks to close a loophole that excludes spaceflight passenger tickets from gross receipts taxes.

State taxpayers have invested millions of dollars in the construction and operation of the spaceport, where the state government has promised returns of high-paying aerospace jobs related to economic development and tourism. 

The bill aims to harvest revenue from ticket sales as the new space venture prepares for regular commercial service from Spaceport America in the southern part of the state, according to the AP. 

Virgin Galactic told investors last fall that it had nearly 700 reservations for flights, the Las Cruces Sun News reported. A ticket allegedly costs around $450,000, and the proposed tax would tack on an estimated $31,000, according to the outlet.

One of the bill’s co-sponsors, state Rep. Matthew McQueen (D), said local communities can benefit from the state’s gross receipts tax revenue if Virgin Galactic flights become regular. 

“I can’t think of a particularly good reason why we wouldn’t tax this activity,” McQueen said.

“When those exemptions were drafted, it was not in anyone’s mind that people would be a payload,” state Rep. Jason Harper (R) said in a statement, referring to a 2019 ruling by the state’s Taxation and Revenue Department that treats spaceflight passengers as freight.

This comes as the new legislation will amend a statute that excludes receipts “from launching, operating or recovering space vehicles or payloads in New Mexico” from gross receipts taxes, the AP reported. 

The statute would clarify that sales “for transporting any person into or near space” would be taxable, the AP noted.