Senator Proposes Tax Break for Vacation Goers

The bill could boost the fuel industry, but critics call it "an invitation to tax avoidance." 

June 25, 2020

WASHINGTON—This week, Sen. Martha McSally (R-Arizona) introduced a bill that would give Americans tax breaks for going on vacation during the coronavirus pandemic, reports TheHill.com.

The bill seeks to offer a tax credit worth up to $4,000 for individuals or $8,000 for joint filers, plus an additional $500 per dependent child, for money spent on domestic lodging, transportation, and food and drinks. Any purchases that took place at least 50 miles from a principal residence would qualify for the tax break. The purchases must be made between Dec. 31, 2019, and Jan. 1, 2022.

McSally said the bill would soften the economic blow of the coronavirus pandemic and foster job growth. It also could jumpstart demand for fuel, restaurants and tourism.

“The tourism and hospitality industries were among the hardest hit sectors across the country and their revival is critical to our economic recovery,” McSally said. “Arizona has lost billions in revenue this year alone due to the pandemic. My legislation will help boost domestic travel and jumpstart the comeback of our hotels, entertainment sectors, local tourism agencies, and the thousands of businesses that make Arizona one of the best places in the world to visit.”

As previously reported in the NACS Daily, the coronavirus pandemic is expected to impact summer travel behaviors. Sixty-eight percent of survey respondents said they expect to travel less than they did last summer, with 86% saying the virus has impacted their travel plans in some manner. Most said if they travel over the summer, they will go by car instead of air, with 71% saying they’re less likely to fly.

Still, “there is this pent-up demand for travel,” said Amir Eylon, president and CEO of Longwoods International, in a previous NACS Daily article, with many expecting that travel plans will turn into domestic road trips. If the new bill were to pass, the incentive could provide more traffic to local gas stations that provide clean environments and show clear social distancing procedures in place. About 55% of people surveyed said they would visit a store based on its cleanliness over where a store is located or what a store’s fuel prices were.

The bill is not without critics, who argue that it would mainly benefit wealthier households. Matthew Gardner with the Institute on Taxation and Economic Policy called McSally’s bill "an invitation to tax avoidance" and noted that she voted against increased unemployment benefits in the COVID-19 stimulus bill signed into law in March.

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