June 14, 2020

Will A $4,000 Tax Credit For Travel Be In The Next Stimulus Package?

[Forbes, Getty Images]

The tourism industry loves the idea and so does President Trump, but will Congress get on board?

If approved, the “Explore America” Tax Credit would dangle up to $4,000 in front of Americans for vacation expenses spent in the U.S. at hotels, theme parks, restaurants and other tourism-related businesses through the end of 2021. The credit would cover up to 50% of a household’s total vacation expenses, up to a maximum of four grand.

President Trump brought up the proposal last month in a White House roundtable with restaurant industry leaders, mentioning an “’Explore America’ tax credit that Americans can use for domestic travel, including visits to restaurants.”

Approval of such a tax credit would be a win for the U.S. tourism industry, which has been pummeled by the coronavirus crisis. Before the pandemic, the industry contributed $2.6 trillion to the economy, supported 15.8 million American jobs overall—8.9 million directly— and delivered a $69 billion trade surplus last year, according to the U.S. Travel Association. But travel businesses and employees were among the first and hardest hit during the crisis, representing nearly 40% of all job loss through April.

White House economic advisor Kevin Hassett told the Wall Street Journal last week that the odds of a “Phase Four” stimulus package before Congress’s August recess are “very, very high.”

The travel industry lobby has pitched a handful of policy proposals for inclusion in any future package. The tax credit would “encourage domestic business and leisure travelers to travel within a specified time frame, similar to what was done through the homebuyer tax credit in the wake of the housing crisis.” The credit would apply to any travel expense “over $50 that is incurred while traveling away from home in the U.S., with explicit reference to the expense of meals, lodging, recreation, transportation, amusement or entertainment, business meetings or events, and gasoline,” according to the proposal.

It’s difficult to tell if this idea is picking up any traction. Since Trump mentioned the “Explore America” Tax Credit last month, the administration has been mum on further details, and Congress has not introduced legislation as of yet.

“We are grateful to the president for hearing our call for a national effort to get Americans traveling again as the country shifts into the recovery phase,” said Roger Dow, CEO of the U.S. Travel Association in a statement last month.

“Travel supported jobs for one in every 10 Americans before the pandemic,” said Dow. “Measures to incent travel will not only give people a renewed appreciation for this great country in which we live, but they are an efficient and effective way to ignite a recovery and restore jobs in every corner of the nation.”

The U.S. would not be the first country to consider using incentives to promote domestic travel. The Japan National Tourism Organisation (JNTO) has proposed a plan that would dole out travel vouchers to Japanese citizens for lodging and dining. And in Switzerland there is a proposal to stimulate domestic tourism by giving every citizen a voucher to be spent on a Swiss staycation.

By Suzanne Rowan Kelleher

Leave a Reply