The Spaceport’s murky revenue and taxation situation
The Spaceport and its primary tenant Virgin Galactic have always been secretive when it comes to their finances. Perhaps the taxpayer-funded facility and its main tenant are embarrassed by the fact that the facility has open for more than a decade without having been used for its intended purpose.
In New Mexico, gross receipts tax (GRT) is applied to all financial transactions unless the Legislature specifically calls them out for an exemption or deduction.
A ruling from the State of New Mexico Tax and Revenue Department does provide a “deduction from GRT which includes receipts from launching, operating or recovering space vehicles or payloads in New Mexico.” Tax deductions cannot be taken on the assumption that someday the Spaceport will engage in these activities. Rather, if launch, operation, or recovery trigger the deduction, then ticket sales should be taxed and there should be records of those taxes being collected and distributed to the State of New Mexico.
Despite the fact that Virgin Galactic has repeatedly reported to the press and filed documents stating that it has sold (or accepted hundreds of non-refundable deposits on) seats on space launches, there have been no taxes collected or reported (using the Tax and Revenue Department’s CRS-1 form) outlining either GRT paid OR deductions taken. Virgin Galactic has already pre-sold some 700 space tickets: 600 between 2005 and 2014, and another 100 since August, when they were relisted for a price of $450,000. Approximately, 100 people have put down $150,000 in deposits since ticket sales were reopened at $450,000 per seat.
According to the Company’s SEC filings, in the 3rd quarter of 2021 Virgin Galactic reported revenues of $2.58 million, but reported no GRT payments (or deductions taken) to the State of New Mexico. RGF has also researched potential GRT payments by Virgin Galactic to the State of New Mexico and as seen no payments or accounting for those deductions.
