The coronavirus has hit the tourism and travel industries hard. In Italy, with hotel occupancy down 99% for foreigners, the Associated Press reported that Italy’s national hotel federation said it has already lost 106,000 jobs as of April and another 500,000 are at risk if travel doesn’t return this summer. The remedy? The Italian government is paying its citizens to travel domestically.
The country is now offering a “holiday bonus” to eligible, lower-income families, encouraging them to travel and spend their money on hotels, restaurants, beaches, and campgrounds across the country for the remainder of 2020.
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According to The Local, hotels will reduce their prices for eligible guests (and claim tax credit to compensate) while travelers can claim expenses as a tax deduction. Households with at least three members are eligible for €500 (about US$544), couples will get €300 (US$327), and individuals €150 (US$163).
With similar plans rolling out in Poland, Slovakia, Romania, and Peru, many experts are wondering if this approach could work in the U.S. It’s certainly a possibility. Both the U.S. Travel Association (USTA) and the American Hotel and Lodging Association (AHLA) have requested tax credits for every family to encourage domestic travel.
A recent policy proposal outlines that Congress should create a new tax credit to encourage domestic business and leisure travelers to travel within a specified time frame, similar to what was done through the homebuyer tax credit in the wake of the housing crisis. Specifically, create a tax credit worth 50 percent of qualified travel expenses incurred in the U.S. between the date of enactment and December 31, 2021, up to a maximum tax credit of $4,000 per household. Qualified travel expenses should include any expense over $50 that is incurred while traveling away from home in the U.S., with explicit reference to the expense of meals, lodging, recreation, transportation, amusement or entertainment, business meetings or events, and gasoline.
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It seems that this policy would not only boost money to the local economy, but financial incentives to travel would also boost people’s well-being after months of self-quarantine and isolation.