Could an “Explore America” Tax Grant Help Kick-Start Sports Travel? | Sports Destination Management

Could an “Explore America” Tax Grant Help Kick-Start Sports Travel?

Jun 20, 2020 | By: Mary Helen Sprecher

The statistics are grim – 200 million travel-related jobs that could be lost be lost in the U.S. alone because of COVID-19. An industry that is hurting is in need of a – pardon the expression – shot in the arm, or maybe even a quick transfusion of cash. But how do you creative incentive for people to travel?

Enter the “Explore America” Tax Grant. Right now, it’s still on the drawing board but if passed, it could provide a travel incentive.

According to an article in Travel Agent Central, the event was brought up at a Washington, DC roundtable back in May. At first, the concept didn’t appear to be going anywhere but the Orlando Sentinel reported that lobbyists working on the concept with officials in Congress.

The goal of the program would be to create a tax credit, capped at $4,000 per household, which would apply to travel expenses through the end of 2021. (A tax credit, explains Diario AS, is an amount of money that taxpayers can deduct from what they owe their a country’s inland revenue. Tax credits are a mechanism commonly employed by governments to encourage economic activities such as paying for childcare and continuing education or saving for a retirement fund).

According to the U.S. Travel Association’s lobbyist, Tori Emerson Barnes, the program is modeled after a tax credit for first-time homebuyers that Congress passed in response to the housing bust and financial crisis from 2007 to 2009.

Predecessors for the U.S. program can be found in Japan and Italy, as well as other countries. Mexico, which recently reopened, has other incentive programs in place.

The Orlando Sentinel reports that early drafts of the Explore America credit could be worth up to 50 percent of a household’s spending on expenses like airfare, rental cars, hotel rooms, tickets to attractions and dining at restaurants that are at least 50 miles away.

Which could mean those who engage in sports travel in either a fly-to or drive-to market could be able to benefit from it.

While this could help revive the tourism industry domestically and give a boost to the economy, Forbes points out that it will would not be direct money like the $1,200 stimulus Americans received as a result of the CARES Act.

Additionally, this may be the wrong time to try to advance such legislation. COVID-19 (coronavirus) cases are increasing in 20 states, plus Puerto Rico, according to The New York Times. Among these states are California, Texas, Florida and Nevada, which also happen to be key sports travel states.

But, notes The Motley Fool, Explore America is by no means a done deal – and it has plenty of unknowns. The problem for those thinking about how to make best use of the travel credit is that further details aren't available.

“A quick search of proposed legislation showed no record of any bills that include the Explore America Tax Credit, and industry watchers haven't been able to find the provision included in any bills currently under consideration,” noted The Fool. “That leaves several key questions unanswered, including the following:

  • Will the same income limits that applied to stimulus payments apply to the credit as well?
  • Will the percentage of expenses allowed as a credit vary by income level?
  • Will there be any requirement that eligible expenses be connected to travel that's a certain minimum distance away from taxpayers' homes? In other words, could someone use the credit to eat at their neighborhood restaurants, or would they have to demonstrate that it was part of a vacation away from home?
  • Would spending on travel expenses prior to passage of the bill be eligible for the credit, or should people put off their travel plans until the idea gains more traction?

There are plenty of other aspects of the plan to be decided. For now, the travel sector, led by US Travel, is in favor of it.

The Explore America concept is not alone in its goals of encouraging investment to turn the economy around. A new program, #SportForRecovery, has kicked off. The program, a global campaign to encourage policymakers to safely re-open organized sport, was launched by a group of governing bodies and other stakeholders across different sports.

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