A bill that would drastically change the tax system in New Mexico by repealing nearly all taxes in the state and replacing them with a low gross receipts tax with no exemptions was introduced by a Republican Senator on Wednesday.
Sen. Bill Sharer, R-Farmington, called the bill “a hard reboot of our tax system” ahead of the bill’s introduction.
He described a tax system so full of exemptions and carve-outs that it now makes up over 1,000 pages. His 228-page bill, Sharer said, is much simpler.
The proposal would eliminate most other taxes and replace them with a small gross receipts tax — up to two percent, with the total going to fund the state government at one percent.
Sharer admitted it would be a big change, not just in New Mexico’s tax structure, but for any state’s tax structure.
“It’s time for New Mexico the take charge and lead somewhere,” Sharer said in a press conference.
Sharer’s legislation was assigned to two committees, the Corporations and Transportation Committee and then the Finance Committee.
The Senate Finance Committee chairman, John Arthur Smith, D-Deming, spoke to New Mexico Political Report on Wednesday morning.
Smith said he appreciated Sharer bringing the bill forward but that “the devil is in the details.”
“I think the debate and discussion needs to be taking place,” Smith said. “I’m not here to toss water on it and ignore it by any means. This is a debate that New Mexico needs to be going through.”
However, Smith said he isn’t a fan of relying so much on one form of taxation and says he is an advocate of “broad-based tax” policy “because when one become anemic, hopefully another would pick it up.”
Sharer outlined some of what the bill will look like.
His proposal would have a maximum of two percent gross receipts taxes, what he described as “one percent for the governor and one percent for the mayor.” The proposal would have one percent of gross receipts taxes go to state coffers, with 0.5 percent to municipalities and 0.5 percent to counties.
While this would replace most other taxes, some taxes would stay on the books. Sharer listed property taxes, severance taxes and gas taxes as the major taxes that would remain in addition to the gross receipts tax under his plan.
Sharer said that there would be a rebate back to New Mexicans who make 200 percent of the poverty level, but said this would have to be done by the Taxation and Revenue Department through regulation.
This isn’t the first time that Sharer has introduced legislation to have a “reboot” of the tax code. He introduced a bill two years ago but with no real thought that it would become law. He said it was “for discussion purposes.”
“This is the first time for real,” Sharer told reporters.
The 2013 bill, co-sponsored by then-Rep. Tom Taylor, made it through several committees for discussion before dying a quiet death.