HOUSE REPUBLICAN News:
SNATA Fe – Today a bipartisan group of legislators introduced their bill to reform New Mexico’s sales tax structure. Their plan, House Bill 412, also called the New Mexico Tax Reform Act, aims to simplify the state’s Gross Receipt Tax (GRT) on sales and services and make it more competitive with surrounding states.
The bill is sponsored by Rep. Jason Harper (R-Sandoval), Sen. John Arthur Smith (D-Luna) and Sen. Carlos Cisneros (D-Taos).
New Mexico is one of only two states that uses a GRT, and it is often rated as one of the worst consumption taxes in the country. The complexity of New Mexico’s GRT discourages companies from doing business in the state, and it pushes in-state businesses to make some purchases out-of-state businesses.
The New Mexico Tax Reform Act proposes to reboot the state’s GRT by eliminating nearly all exemptions, deductions and credits. This plan will broaden New Mexico’s tax base and stabilize revenue streams. It will also simplify compliance for businesses and increase transparency.
Importantly, the plan will increase uniformity and reduce the tax burden on New Mexico’s small businesses and other groups that do not currently benefit from special category exemptions, deductions or credits. The proposal will significantly lower the tax rate for all New Mexicans.
“The hundreds of exemptions, deductions and credits in New Mexico’s GRT favor certain industries while placing an unfair tax burden on small businesses and consumers,” Rep. Harper said. “Every exemption that’s created raises the rate for everyone else. Our current tax base has so many holes, it’s like a block of Swiss cheese. It’s time to put the cheese in the oven, melt it down, and create something uniform and fair for everyone.”
“A substantial discussion on tax reform is long overdue,” Sen. Smith said.
The plan includes important protections for lower income families. Under the proposal, the 23 percent of New Mexicans who receive help from the federal Supplemental Nutritional Assistance Program (SNAP) will not pay taxes on food, including food bought with non-SNAP dollars. The plan will also increase the Low-Income Comprehensive Tax Rebate for families earning up to 150 percent of the federal poverty standard.
“We’ve worked hard to buffer lower-income New Mexicans from any potential harm,” Harper said. “With the protections included in the plan, coupled with the proposed lower tax rate, lower-income residents should see a net decrease in the total taxes they pay. Those in need will still be exempt from paying taxes on food, and they will also pay less for essential items like school supplies, clothing and household expenses.”
Harper continued, “The plan we’re proposing today is the product of thousands of hours of research and analysis. It modernizes our tax code and puts the state on a firm foundation to handle future economic conditions. We have to act now to turn the state’s economy around. Reforming our GRT will help create jobs and prevent the export of our most precious resource, our children, to other states in search of employment opportunities.”