HB 412 Tax Reform (Rep Jason Harper and Senators John Arthur Smith and Carlos Cisneros) passed the House unanimously and is headed to the Senate.
This is comprehensive tax reform that is long overdue. The fact that it had three stellar leaders across parties and chambers is exactly what New Mexico needs to see happening much more often. While no legislation is perfect, this is a step that will truly help New Mexico. Big congrats and lots of gratitude to these three heroes!
Objective: To reform substantial problems in the New Mexico Gross Receipts Tax (GRT) structure.
Problem: The NM GRT is routinely rated as one of the worst state consumption taxes in the nation. It produces pyramiding, which has increased our taxes significantly. As a result, it has been amended with excessive exemptions or carve outs that ultimately hurt the state in tax revenue and leave us with a complex tax system often too onerous to navigate without a paid professional.
Solution: A new tax structure that will be fair, transparent, and easier to use. It will broaden the tax base in order to lower the rates.
Summary:
- Broadens the tax base by removing most exemptions, deductions, & credits
- Significantly lowers state and local tax rates
- Removes most of the pyramiding (such as on professional services)
- Simplifies compliance
- Increases fairness – levels the playing field for New Mexico businesses by taxing internet sales transactions
- Provides flexibility to local governments by converting all county and municipal earmarks to general purpose
- Re-brands GRT as ‘Sales Tax’