A look at tax reform proposals at the Roundhouse
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SANTA FE, N.M. — There are new proposals at the Roundhouse urging tax reform. Here’s a breakdown of the legislation making moves:
House Bill 230, a proposed tax increase on alcohol, is moving forward. The bill cleared its first committee Friday morning. It would add a 25-cent tax to every pint of beer, glass of wine, or a shot of liquor. The bill’s sponsors said increasing the state’s alcohol tax is long overdue.
“We haven’t raised the alcohol excise tax since 1993, that’s 30 years that we have seen inflation, strip away the effects of having an alcohol tax to help reduce consumption,” said Rep. Joanne Ferrary.
A 2022 study found for every 1% increase in cost, beer consumption drops by 30%, wine consumption drops by 60%, and liquor consumption drops by 64%.
The sponsors said the proposal could decrease total alcohol consumption in New Mexico by 7%.
“What this bill does is it will reduce consumption and literally save lives,” said Sen. Antoinette Sedillo Lopez.
More than 2,700 New Mexicans died from alcohol last year – a nearly 50% increase from 2020. That’s not including the number of DWI cases and health impacts.
“With the economic losses due to injuries and illnesses, productivity losses, health care costs and criminal justice responses are very, very expensive to our state and who pays for them? Taxpayers,” Sedillo Lopez said.
That’s an estimated $1,000 a year for the average New Mexican. Despite the lower consumption, the proposed alcohol tax is still projected to generate more than $155 million a year in revenue, which could be used to fund prevention and treatment programs long-term.
CHILD TAX CREDIT
House Bill 144 is working to increase the child tax credit for low-income New Mexico families. The proposal would give the lowest-earning New Mexicans a $600 credit per child.
Right now, they’re only getting a $175 credit. The bill was tabled by the House Taxation and Revenue Committee Friday morning, but that doesn’t mean it’s done. It could also be rolled into a bigger tax reform package later in the session.
Gov. Michelle Lujan Grisham unveiled bipartisan legislation Thursday that would lower the state’s gross receipts tax rate to 4.625% and create a deduction for a wide range of services sold to other businesses.
House Bill 367 is sponsored by Rep. Jason Harper.
“This tax cut builds on the historic reductions we enacted last year, and the commonsense anti-pyramiding provisions in this bill will make goods and services even more affordable for all New Mexicans,” said Gov. Michelle Lujan Grisham. “Plus, it’s going to make New Mexico businesses even more competitive, continuing this administration’s commitment to making our state the very best place to do business.”
According to the governor’s office, the legislation could potentially save New Mexicans as much as $411 million in total.
- Track HB 144 during the legislative session.
- Track HB 230 during the legislative session.
- Track HB 367 during the legislative session.