Legislators head back to the drawing board after tax reform vetoed
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SANTA FE, N.M. – The promise of major tax reform fell a bit short this session. Gov. Michelle Lujan Grisham took a pen to the tax package saying it cut too deep too fast.
A measure that would have kept more money in your pocket, and more businesses knocking on the door did not make it across the finish line.
Lawmakers say it’s back to the drawing board. It was considered a big incentive for businesses and consumers alike.
A reduction in the state’s gross receipts tax means more money in your pocket.
“In New Mexico we tax everything, and then we tax it several times,” said Carla Sonntag with the New Mexico Business Coalition.
New Mexico often taxes goods and services at multiple points before a final sale. Because of that, lawmakers wanted to slash one-half percent from the gross receipts tax over the next four years.
The Taxation and Revenue Department says it would have been a nearly $500 million impact to recurring dollars.
“A reduction of any gross receipts tax is going to have some immediate impact on services and goods purchased,” said Rep. Derrick Lente.
But the GRT reduction was one of many tax breaks vetoed by Lujan Grisham, saying the cuts were too much.
“I just want us to be a bit pragmatic. but I don’t want the message to be that the things in the tax bill we’rent good things,” said Lujan Grisham.
A let-down for not only lawmakers but consumers and businesses too. Something Carla Sonntag with the New Mexico Business Coalition says would have helped incentivize businesses to come to New Mexico.
“What we advocate for is good policy, a reduction was a step in the right direction. We truly need a rewrite of the system,” said Sonntag.
Lujan Grisham says it’s back to work to find a way to balance tax deductions and money coming in.
“At the end of the day, we’re doing this work for New Mexicans, so we can get their tax right and provide an equitable tax system, a beneficial tax system that they deserve,” said Lente.
While the veto was deflating, lawmakers say they will use this interim to rework those proposals with the goal of having a new package ready for the 2024 session.