Vacation Tax Credit: Advantages and Disadvantages

It’s got a ways to go, but the ‘Explore America’ proposal has gained some serious steam, especially after earning the backing of President Donald Trump. The bill would act as a vacation stimulus, with the proposed guidelines suggesting that households can be credited up to $4,000 for money spent on travel, including theme parks, hotels, rental cars, airlines and even restaurants.

Social media has kept the proposal among one of the hottest topics as many questions have emerged as to how it would benefit the country and what the payouts come tax season would look like. Rumors of something happening soon in regards to a new stimulus were sparked after a recent comment by Trump, who shared that something “dramatic” could be coming. He added that it would be aimed for Phase 4 and that it’s “going to be very dramatic, very good.”

With the proposal being aptly discussed, here is a look at some of the advantages and disadvantages that come with a proposed vacation tax credit.

Stimulus Tourism Industry

The ‘Explore America’ proposal is aimed at providing help in many regards, but the most talked about benefit would be the impact it would have on the travel industry. The main purpose of investing this much money into Americans’ pockets would be to promote travel and reinvigorate the industry after so much was lost over the past few months amid the pandemic. The U.S. Travel Association put out a statement after learning of the proposal, saying this would be a huge boost for them, “”An ‘Explore America’ tax credit and campaign will do wonders to put America back on the path to prosperity.”

Many places across the country, theme parks such as Walt Disney World and Universal Studios, have either already opened back up or are set to do so in the coming weeks and are hoping to quickly pick back up where they left it. Cruise ships also were among the biggest markets to see a decline, and while it may take until 2021 for that industry to get back up and running, the stimulus would allow people to start investing money into future cruises. Tourism also includes areas like hotels, rental cars and restaurants, all of which would benefit from the decision. 

Help Stimulus Airlines

While the tourism industry as a whole would be the biggest benefactor of this proposal, nestled inside that is the airline industry which, like cruise ships, took a major hit once the coronavirus outbreak began. With states going into quarantine, major events being cancelled and certain international travel being banned, airlines saw a big hit to their stock as a result. The ‘Explore America’ proposal would greatly rejuvenate the tourism industry, and thus provide some confidence for consumers to resume traveling via airplanes. 

Sir Tim Clark, the president of Emirates, gave his prediction during a recent webinar according to Aviation Pros that the industry will likely return to normalcy in June 2021 assuming a vaccine is discovered. He added that a “large uptick” will be found medium and long-haul airlines come next summer. Having the backing of this proposal going through would only add further assistance to airlines getting back in business. Clark noted that people “are anxious” to get back to their livelihood and while it’s been a challenging time in an industry hit hard with salary cuts and furloughs, “things will change” soon enough. 

Promote Trips Otherwise Not Planned

With the potential of an additional $4,000 in tax refunds as a result of the vacation stimulus, people looking to get back to normalcy could very well be eager to book their next trip. There’s a good chance that knowing a future vacation could be covered by the government as a result of putting money back into the tourism economy, would be a major incentive for people who were previously on the fence about booking to go through with their decisions to schedule a vacation. 

This has been evidenced across social media as many people, after learning of the proposal, began to share their plans for what they’ll do if this bill were to get passed. One person shared that they were waiting on a trip to Disney World for later in the year and keeping an eye on a future vacation credit. 

Not Viable for Everyone

Of course, while the ‘Explore America’ proposal sounds enticing in theory, the big issue at hand is that for many people, the pandemic has been a huge financial strain and planning a vacation is just not possible for the foreseeable future. WIth the potential for $4,000 in credit not being something paid in advance but rather during tax seasons, it’s contingent on people having excess money during the pandemic to be able to spend it on tourism. 

Across social media, this has been the biggest gripe of people, many of whom would rather this come in the form of a second stimulus aimed to help benefit people instantly then forcing the money to go into a specific industry. 

The Coronavirus Threat

While restrictions have been lifted in some states, the coronavirus continues to be a big problem across the country, especially in states like Florida and California, which are among the most sought out travel destinations in the country. The ‘Explore America’ proposal would certainly be a boost for the industry, but it would only reach its full impact if people are able to spend money and feel that going away is safe. With COVID-19 being at the forefront for three months and for the foreseeable future, the travel industry is going to need to find ways to provide a level of safety and sanitization in order to convince people to come visit. 

Theme parks have installed many protocols to enhance cleanliness, promote social distance and provide an overall safe environment. Yet, without a vaccine, many people won’t feel safe traveling to other states, especially if numbers continue to increase like the spikes that are currently being seen. With the ‘Explore America’ proposal being a hot topic on social media, many in opposition of promoting travel during the pandemic shared their opinions on why it’s not going to be safe to travel until a vaccine is found. 

Not An Instant Benefit

Talks of a second stimulus have become a major talking point ever since the payments first began to roll out for the first round of financial support went out. While hopes of a second stimulus remains with multiple proposals on the table, the ‘Explore America’ package would not provide instant financial help for people who are struggling to make ends meet during the pandemic. As one user on Twitter point out, unless someone has $4,000 in excess to spend right now, planning a vacation with the hopes of getting it reimbursed months later is not a realistic option for many people. 

Another user suggested the proposal should only pertain to essential workers. The tweet called it a “nice” concept but should aim to help those on the front lines during the outbreak, “Many of us essential workers can’t take vacations and furloughed people around us made more money with the CARE Act then we did working.”