Serving the High Plains
Serving the High Plains
Although legislators decided against overhauling our exemption-ridden gross receipts tax system during the recent regular and special sessions, they did earmark $400,000 to study it.
“The people of New Mexico will be watching to see if this becomes another government study that gets filed away only to collect dust,” Gov. Susana Martinez said after finally signing a budget for the upcoming fiscal year that starts July 1. “New Mexicans deserve action.”
New Mexicans also deserved action on Martinez’s 2011 promise to review the numerous tax breaks the state hands out with no clue of whether they are cost-effective. She ordered the review in 2011 with an eye to estimating taxpayers’ ROI, or return on investment, for attracting jobs to the state.
And in 2017, the nonpartisan Pew Charitable Trusts says New Mexico is among 23 states that do a terrible job of evaluating business tax incentives to determine whether they’re worth the money they cost taxpayers. The group’s study looked at credits, exemptions and deductions offered through the tax code that try to strengthen the economy by creating jobs and attracting new business. And it found a glaring omission: New Mexico has no annual return-on-investment analysis, something lawmakers have tried to get into law since at least 2007.
Last year there were more than 130 tax breaks on the books, and last month State Auditor Tim Keller estimated New Mexico leaves about $1 billion on the table annually because of them. We can only hope the upcoming study will answer the what-do-we-get-for-our-money question — not only on the tax breaks we give businesses, but on all similar exemptions, credits and deductions.
For example, what kind of return does the state get for the $395.7 million in tax breaks it gives to the oil and gas (and to a lesser extent, mining) industries each year? And does the $242.6 million not collected via a food tax deliver a return on investment in other tangible ways?
The short answer, of course, is “we don’t know.” Therein lies the problem.
Legislators missed an opportunity to overhaul the gross receipts tax system in the recent legislative sessions by failing to act on a bill from Rio Rancho Republican Rep. Jason Harper that would have eliminated more than 100 tax breaks, broadened the tax base and lowered the overall tax rate; they maintained they needed more time to study it.
Now they have it, along with $400,000 to give them the information they say they need to reform state taxes the right way. Let’s hope this endeavor actually delivers a return on investment.
And not another study ready to collect dust.
— Albuquerque Journal