Wealthy space tourists don’t need our charity
Commentary: From the day in 2005 when the agreement between Bill Richardson and Richard Branson for what would later become Spaceport America was first announced, the business model for southern New Mexico has always been to separate wealthy tourists from their not-so-hard-earned vacation money.
“... First flights of a suborbital spaceliner (are) now planned in late 2008, early 2009,” Virgin Galactic announced in a 2005 press release, the first of what would be many overly optimistic projections.
As the opinion page editor for the Sun-News at that time, I supported the spaceport, even though I understood it was a glorified playground for the super-rich. That support continued through the lean years after the fatal test flight in 2014, not because of my love for the super-rich. But I did, and still do, see the economic potential in bringing a whole bunch of them to town on vacation.
All of which makes the decision by the New Mexico Legislature not to tax the millionaires and billionaires who, I hope, will someday be launching from Spaceport America so perplexing … and so insulting to the residents of Dona Ana and Sierra counties who continue to pay an increase in our gross receipts taxes for construction of a facility that was finished years ago.
A 2019 change to state tax rules reclassified space tourists as “payload,” which is exempt from the gross receipts tax under a bill designed specifically for the spaceport, and not passengers, which are not exempt.
And so, while New Mexico residents pay gross receipts taxes on all the basic necessities, out-of-state billionaires blasting into space don’t pay the tax. It must be the most regressive policy in the state’s entire tax code.
A bill that would have closed the loophole was tabled in the House Commerce and Economic Development Committee last week, based on arguments that the state had made a promise to Virgin Galactic right from the start, and now must keep that commitment.
Virgin Galactic executive Sirisha Bandla told House committee members that the loophole passed in 2019 had been anticipated 14 years earlier when the original deal was made.
If that’s true, why wasn’t it clearly spelled out in the original contract? Between Virgin Galactic and the state of New Mexico, it’s hard to imagine how many attorneys and how many billable hours went into its drafting. Did they all just forget? Why the need for legal sleight of hand now, pretending that people are no different than scientific experiments tucked into the nose cone?
Opponents of the bill also argued that taxing the rich would stifle an industry that is still in its infancy.
This would be a good time to note that the price for a ticket has gone up from $200,000 in 2005 to $450,000 now. This, despite the fact the Virgin Galactic has yet to prove that it can deliver on its promise of safe, routine launches.
The notion that charging gross receipts tax will somehow deter those willing and able to pay $450,000 a ticket, or sour what will be a once-in-a-lifetime experience, is preposterous.
New Mexico taxpayers spent some $225 million to build the spaceport, and continue to spend $4 million a year for maintenance and operations, according to the bill’s sponsor, Rep. Jason Harper. It’s time that we started to see a return on that investment.
Walter Rubel can be reached at waltrubel.com.