Coronavirus USA

$4,000 travel tax credit: when could it be passed in Congress?

Donald Trump's proposal would have to be included as part of the next federal stimulus bill, which is stalled as Democrats and Republicans joust over HEROES Act.

$4,000 Travel Tax Credit: when could the stimulus be approved in US Congress?
JOHN G. MABANGLO EFE

US President Donald Trump’s proposal for a $4,000 travel tax credit scheme to boost a national tourism industry reeling from the impact of the coronavirus was first discussed during a White House round table with restaurant executives and industry leaders in May but has yet to be fleshed out in terms of what exactly it will consist of and when it may reach the floor of Congress to be voted on. The US president made the suggestion as part of his plans for a Phase 4 stimulus package that is expected to be similar in terms of outlay to the $2.2 trillion CARES Act that was introduced in March.

The global tourism industry has been hit hard by the Covid-19 crisis and in the US it has added to a level of job destruction not seen since the Great Depression. Over 45 million people have filed for unemployment since mid-March and the tourism industry, which relies on seasonal workers, has shed millions of workers with those retaining their job having their hours reduced.

Trump’s proposal, “Explore America,” is designed to give the tourism industry a much-needed shot in the arm by allowing US citizens who choose to take a vacation in-country to claim back 50 percent of their expenses in areas such as travel expenses, accommodation, food costs and expenditure on entertainment, the US Travel Association stated.

The scheme will run until the end of 2021 from its launch date but the US government has yet to finalize the finer points of the proposal or to announce a timescale for its implementation. The HEROES Act, championed by Democratic House of Representatives speaker Nancy Pelosi, remains on the table but is likely to be rebuffed when it reaches the Republican-controlled Senate in July or August.

The Republicans are expected to make a counter-proposal, the basis of which will be Trump’s Phase 4 rollout. “I think we’re working on something that’s going be very dramatic, very good,” the president said during a recent interview. "Phase 1, 2 and 3 have been fantastic for people generally… small business owners, also. But we’re looking at doing something else.”

When could the $4,000 travel tax credit be approved?

People at the beach in Miami, Florida on June 16, 2020.

The $4,000 travel tax credit is not a stand-alone proposal and will have to be included as part and parcel of the next federal stimulus package. With several already on the table – the HEROES Act, a Democrat-led $1.5 trillion infrastructure bill called the Moving Forward Act and whatever response to both the Trump administration comes up with – negotiations are likely to be lengthy.

The Republicans have been dragging their heels on getting the HEROES Act to the Senate floor while Trump’s economic advisers explore other options, but the inclusion in any proposal of the $4,000 travel tax credit has the support of both Trump and the US Travel Association, making it likely that it will come to fruition.

The scheme would boost employment and encourage US citizens to spend money on domestic travel but with the easing of lockdown restrictions linked to a recent spike in cases across more than 20 states, it remains to be seen if a travel tax credit is viable this summer.