The Associated Press
Summaries of tax commission recommendations
The Associated Press
Here is a list of recommendations approved by the Blue Ribbon Tax Reform Commission:
—Expand tax rebate for lower income New Mexicans and increase personal exemption for lower and middle income taxpayers. Reduce revenue by $45 million.
—Phase out capital gains deduction for upper income taxpayers. Increase revenue by $17 million.
—Capital gains deduction for sales of closely held businesses. Reduce revenue by $3 million.
—Simplify tax system by reducing the filing status options from four to two, combining married filing joint returns and heads of households; and single individuals and married filing separate returns. Would provide tax relief to single parent families who currently file as heads of households. Reduce revenue by $2.4 million.
—Gross receipts deduction for licensed health care providers for payments from HMOs and managed care companies for services for Medicaid part ‘‘C.’’ Tax break would expire in 2009. Reduce state and local revenue by $40 million.
—Lessen the pyramiding of the gross receipts tax on a series of transactions by repealing the ‘‘next sale taxable’’ provision. That currently prevents a service from being resold without tax in two consecutive transactions. The change will not apply to governments or nonprofits. Reduce state and local revenue by $50 million.
—Reduce top rate of corporate income tax to 6.4 percent from 7.6 percent, creating two-tier rate system. Reduce revenue by $18 million.
—Require combined tax filings by corporations using a ‘‘unitary business’’ principle. That would require large companies to combine profits and losses of interdependent corporations. Increase revenue by $16 million.
—For state tax purposes, not allow an accelerated or ‘‘bonus’’ depreciation granted under a 2001 federal tax cut. Increase revenue by $6 million.
—Require a study of economic development incentives provided by the state.
—Create a new credit for companies creating ‘‘high wage’’ jobs. Reduce revenue by $1.5 million.
—Provide a three-year ‘‘tax holiday’’ from gross receipts taxes and compensating taxes for research and development by small businesses. Reduce revenue by $1 million.
—Exempt new gas-electric hybrid vehicles and alternative fuel vehicles from the motor vehicle excise tax. It’s a one-time exemption. Reduce revenue by $500,000.
—Double the annual corporate franchise tax. It would increase to $100 from $50. Increase revenue by $2.5 million.
—Impose the $100 franchise tax on limited liability corporations and other ‘‘pass-through entities.’’ Increase revenue by $2.4 million.
—Increase the annual filing fee paid by nonprofits to the Public Regulation Commission to $100 from $10 and for-profits to $100 from $25. Increase revenue by $3 million.
—Several administrative changes, including an ‘‘independent’’ hearing process for tax cases and reducing the interest rate for penalties. One proposal would create a new government office for administrative law judges. Currently, hearing officers in administrative tax cases are employees of the Taxation and Revenue Department. The interest rate change would reduce revenue by $4 million; another proposal would increase revenue by $500,000 by raising the minimum penalty for failing to file with the department.
—Require gross receipts tax filings for nonprofits with receipts of more than $250,000. Nonprofits would not be required to pay tax because the current exemption would become a deduction. The reporting requirement is to gather more information about nonprofits. Churches would be excluded.
—Eliminate gross receipts tax for all for-profit hospitals. Currently, a 50 percent deduction is provided and that would be expanded to 100 percent. Reduce state and local revenue by $12 million.
—Tax employee leasing companies the same as temporary employment service companies. Increase state and local revenue by $9 million.
—Tax bail bondsmen at the gross receipts tax rate rather than the insurance premium tax. Increase state and local revenue by $300,000.
—Make New Mexico follows a ‘‘delivery rule’’ that is used by other states for deductions of goods exported to an out-of-state customer. Reduce revenue by $100,000.
—Repeal a 1992 aerospace corporation deduction that was never used.
—Impose motor vehicle excise tax on agricultural implements, aircraft and some other vehicles that are not required to register as motor vehicles. For all-terrain vehicles and snowmobiles it will mean a slight reduction because they are currently subject to the higher gross receipts tax. Overall increase state and local revenue by $2.6 million.
—Impose gross receipts tax on newspaper sales, repealing a current deduction. Increase state and local revenues by $2 million.
—Eliminate a gross receipt tax deduction for chemicals bought in ‘‘carload lots’’ of 18 tons. Increase state and local revenues by $500,000.
—Repeal a gross receipts tax deduction for leasing of vehicles used in interstate commerce. Increase revenue by $100,000.
—Expand a deduction for sales of materials for manufacturing jewelry. Removes a current $5,000 cap on the deduction. Reduce revenue by $100,000.
—Impose gross receipt tax on rental of storage units. Increase state and local revenue by $1.3 million.
—Reduce a state gross receipts credit to municipalities; has the effect of increasing the tax by one-eighth of a percent. Increase revenue by $36 million, provides $7 million of that to local governments.
—Provide for local option taxes on top of the state compensating tax. Increase revenue to local governments by $14 million and reduce state revenue by $3.8 million.
—Apply compensating tax to all services imported from out-of-state providers. Increase state and local revenue by $18 million.
—Expand governmental gross receipts tax to cover more governmental services, including parking and airport fees. Increase revenue by $5 million.
—Increase interstate telecommunications gross receipts tax, which applies to receipts from long-distance calls, to 5 percent from 4.25 percent. Increase revenue by $1.5 million.
—Impose compensating tax on sales of manufactured housing on Indian lands. No estimate of revenue impact.
—Double the surcharge on rental cars and short-term leased vehicles; from $2 a day to $4 a day. Increase revenue by $6.6 million.
—Impose new property transfer tax on sales of homes. Graduated rates of 1 percent to 2 percent applies to value of home over $100,000. Increase state and local revenues by $20 million.
—Study property tax administrative provisions.
—Increase motor vehicle excise tax over two years to 4.5 percent from 3 percent. The tax applies on sales of cars, trucks and other motor vehicles. A portion of the tax, 0.5 percent, would go to pay for highway construction and maintenance. Increase revenue by $62 million, with nearly $21 million for highways.
—Try to collect tax on tobacco sales to non-Indians on tribal land; begin negotiations with tribal governments to work out an agreement. Increase revenue by $4.5 million.
—Eliminate a cigarette tax stamp discount. Increase revenue by $1.3 million.
—Increase tax on tobacco products, such as cigars, to equalize the tax with a higher cigarette tax enacted earlier this year. Increase revenue by $3 million.
—Increase the hours that slot machines can be operated at horse racing tracks each day. Increase revenue by $4.2 million.
—Eliminate a tax credit given to horse racing tracks for certain capital improvements; earmark half of the money for improvements at the State Fair. Increase revenue by $1.8 million.
—Gross receipts tax exemption for boxing matches; currently promoter also pays a privilege tax. Reduce revenue by $1.2 million.
—Change the privilege tax on boxing and wrestling to a fee and authorize the Athletic Commission to enter into agreements with tribal governments for enforcing and administering the fees. No revenue estimate available.
—Increase a tax on oil production; the Oil and Gas Emergency School Tax rate on oil would increase to 4 percent from 3.15 percent. Increase revenue by $11 million.
—Impose new tax of 33 percent on ‘‘collected’’ punitive damages from court actions. The tax would be imposed after attorneys fees and expenses and the tax money would be deposited in a new trust fund, which the Legislature would decide how to spend. No revenue estimate available.
—Increase the gasoline tax by 2 cents a gallon; currently the tax is 17 cents a gallon. Increase revenue by $16.8 million, with the money going to the state road fund that pays for highway work. The tax would be indexed for inflation, providing for automatic increases in the future of up to 1 cent a gallon. Indexing would increase revenue by $8.4 million.
—Increase the tax on special fuels, such as diesel, by 3 cents a gallon; currently the tax is 18 cents. Increase revenue by $13.2 million. Tax would be indexed for inflation; increasing revenue by $4.4 million.
—Increase weight-distance tax paid by large commercial trucks. Increase revenue by $13.8 million; money earmarked for highways.
—Increase permit fees for overweight and oversize vehicles. Increase revenue by $1.3 million; money earmarked for highways.
—Impose additional ‘‘ton-mile’’ fee for overweight vehicles. Increase revenue by $2 million; money earmarked for highways.
—Increase vehicle registration fees, an average of $12.50 a year; the fees currently average $38. Increase revenue by $21.4 million; money earmarked for highways.
—Give counties more authority to increase gross receipts taxes without voter approval of the levies. Could mean increases of up to $90 million in local revenue.