The following article by Dan McKay of the Albuquerque Journal provides a bit of hope regarding the potential for GRT reform and provides an impetus to offer some thoughts on the GRT and how to reform it.
First of all, kudos to Ismael Torres, chief economist for the Legislative Finance Committee, for his candid and spot-on remarks on the GRT. According to McKay, he said, “the complexity of the gross receipts tax system, the high tax rate and the taxation on business-to-business transactions contribute to the poor evaluation (of NM’s tax structure).
“The real anchor for New Mexico’s taxes tends to be the gross receipts tax.” It isn’t complicated, but he’s spot-on. And, “He added that the gross receipts tax is also regressive, hitting lower income families harder than others because they spend a higher share of their income on consumption.”
Torres is thee for three.
Even liberal Rep. Antonio “Moe” Maestas, D-Albuquerque, gets it right on the grocery tax issue saying, “Unwise as it may have been to exempt some food from the gross receipts tax, it’s been impossible to build support for taxing it again.”
He’s right. Not only that, but Republicans (many of whom support reinstating the grocery tax as part of a broader tax reform) need to give it a rest. In other words, focus on eliminating taxes on business-to-business services and making the GRT less economically-harmful (while focusing on eliminating loopholes and generally lowering rates) and quit obsessing over taxing groceries.
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