September 20, 2017

Santa Fe County voters reject tax increase

Santa Fe voters rejected another tax increase, this time in a low-turnout special election.

The increase would have raised the gross receipts tax in Santa Fe County by one-sixteenth of one percent, or 6.25 percent on every $100 spent.

The results were anything but close—70 percent of the voters opposed the increase.

Unlike the sugary-drink tax election, which drew  a lot of campaign spending and relatively high turnout, unofficial numbers from the Santa Fe County clerk showed just under 8,000 voters cast ballots for the gross receipts tax election, less than ten percent of the county’s registered voters.

The state’s base gross receipts tax, which applies to most goods and services but not food or medicine, is 5.125 percent. It can go as high as 8.6875 percent.

The county had already increased the rate, effective at the beginning of 2018,  by one-eighth of one percent, raising the tax rate in the city of Santa Fe to 8.4375 percent and in unincorporated parts of the county to 7.125 percent. The city of Santa Fe’s GRT rate is the highest in the state.

The New Mexico Legislature allows municipalities and counties to further raise their local GRT rate as the state ends the “hold harmless” status for the local governments. Local governments were reimbursed for tax money lost when the state exempted food and some medical expenses from GRT.

However, the state began phasing out the hold harmless payments in 2015, which will end in 2030.

The Legislature is considering an overhaul of GRT as a way to lower the tax rate while expanding the tax base. Discussions are ongoing, and the effort is anything but simple.