Virgin Galactic Avoids Space Flight Tax as Lawmakers Back Off

Virgin Galactic space flights won’t fall under a New Mexico tax on tickets to travel nearly 57 miles above the Earth—at least for now.

State lawmakers said Monday a proposal to apply a gross receipts tax to space tourism tickets would send the wrong message to companies about the reliability of New Mexico’s business climate. A legislative committee tabled the bipartisan measure (H.B. 72), a procedural move that means the idea has little chance of succeeding this year before the session ends Feb. 17.

That was good news for Virgin Galactic, which plans to offer regular commercial space flights from New Mexico’s taxpayer-funded spaceport. The proposed tax could have added upwards of $37,000 to the price of a $450,000 ticket, according to a fiscal analysis, though it’s unclear what local tax rate would have applied with the changes.

Bill sponsors said people purchasing the tickets could afford the extra cost. State taxpayers already have spent millions of dollars to build and maintain the spaceport, and “it’s time for us to see a little bit of return on that investment,” bill sponsor Rep. Jason Harper (R) said.

A ticket tax, though, could cause New Mexico to fall behind other states trying to attract and retain aerospace companies, said Sirisha Bandla, vice president of government affairs and research operations for Virgin Galactic. Legislators on the committee voiced similar concerns.

“It’s just the wrong message,” said Rep. Rebecca Dow (R).

The measure would have limited the application of an existing gross receipts tax deduction for space operations—an incentive intended to develop the industry in the state. The state’s tax department previously ruled that passengers fall under the deduction.

Virgin Galactic already has sold about 700 tickets at varying prices, according to statements to investors. The company says it expects to start commercial service later this year.