Earlier today, we advised you of all the revenue proposals that had been introduced.  Tonight, the Senate Finance Committee passed a version of some of those that will now move to the Senate Floor and then to the House.  It appears that this package may be the compromise.

Senate Finance passed a substitute for SB10, SB12, SB13.  The substitute provisions and revenue estimates are as follows for a total of $201M:

$60M:  Increase the GRT by 1/8%

$12M: Amends the compensating tax, to impose the tax on purchases that are not subject to the gross receipts tax only because the seller does not have nexus with the state.

$68M: Repeals the food deduction but creates a 5.25 percent credit for food so that only local tax rates will apply to food at an average tax rate of slightly over 2 percent. The state would discontinue that portion of local government hold harmless distributions that are attributable to local option taxes. However, the state would continue to make a separate hold harmless distribution to municipalities equal to 1.225 percent of food sales for which a tax credit is claimed.

$66M:  Requires personal income taxpayers who itemize their deductions to reduce the amount of itemized deductions for New Mexico purposes by the amount of state and local taxes included in the itemized deductions for federal purposes.

($5M):  Expands LICTOR to help the low income people hurt by the increase of the food tax.

Senate Finance also passed:  SB7: INCREASE CIGARETTE TAX sponsored by Sen. B. Sanchez.  This bill would impose a $.50 tax on a pack of cigarettes.  This bill would generate about $25M bringing the total revenue to $226M.

This is combined with the $13M generated by the passage of HB120 during the regular session.  HB120: AMENDMENTS TO TAX WITHHOLDING introduced by Speaker Lujan is a 30-page bill that substantially reorganizes and refines tax withholding provisions. The bill requires employers of 50 or more employees but who are not required to file an unemployment insurance tax form to file a quarterly withholding information return to Taxation and Revenue Department. The bill requires New Mexico pass-through entities to withhold and remit on a quarterly basis from each nonresident owner’s interest. Substantial revisions to the bill were made to lessen the impact on business.