I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
Richardson, opposed to food tax, weighs levy on soft drinks, candy
“I have serious reservations about bringing up the food tax,” Richardson said after a Greater Albuquerque Chamber of Commerce event in Albuquerque. “Perhaps the solution might be to look at some of the loopholes like candy, like sodas.”
Candy and soft drinks now fall under a food exemption to the state’s gross receipts tax (GRT), and removing that exemption would mean consumers would pay taxes on soft drinks and candies upon purchase.
At least one organization opposed to taxing food purchases welcomed the governor’s suggestion Tuesday.
“We believe that a targeted tax on candy and soda would be a good compromise and a fair alternative to reimposing the food tax,” Fred Nathan, executive director of Think New Mexico, said in an e-mail Tuesday. “Although it too would be regressive, it would be levied on luxury items, not necessities like fruits, vegetables, and baby food.”
Whether or not to repeal the state’s GRT exemption on food has become a pre-legislative session debate as state policymakers wrestle with ways to close New Mexico’s large budgetary shortfall.
Starting next week, when the 30-day legislative session beings, Richardson and state lawmakers will struggle to find a balance between spending cuts and tax increases to address the state’s budgetary woes.
Already, state lawmakers have pre-filed bills that tackle the food exemption in various ways, including the way that Richardson is suggesting.
One piece of legislation would remove soft drinks from the food exemption; it is sponsored by Sen. Dede Feldman and Rep. Danice Picraux.
Another bill, filed by Sen. Bernadette Sanchez, would narrow the food exemption to staple foods such as meat, poultry, fish, bread, cereal, vegetables, fruits or dairy products.
The biggest advocate for repealing the food exemption from the GRT is the Greater Albuquerque Chamber of Commerce. Taxing food purchases, its officials say, could go a long way to balance the state’s budget. Estimates project repealing the food exemption could generate $229 million a year. The state is battling a projected shortfall of hundreds of millions of dollars.
“A repeal of the food tax hasn’t done the good work that you had hoped it would do,” Terri Cole, the chamber’s executive director, told Richardson at a chamber event on Tuesday.
“Let us find an affordable way to make a real difference,” Cole said, lobbying the governor in front of a crowd of several hundred people. “That puts us in a position of putting in place a broad-based tax, which helps to keep taxes low. We could pull $20 million in re-occurring and give it to a coalition of people who could target that money to help the hungry.”
Nathan of Think New Mexico said a decision to tax food would serve as an “anti-stimulus” at a time when the economy needs a jump start.
The typical family of four would pay $460 in GRT taxes annually, Nathan wrote in his e-mail, “money that New Mexico families would then not be able to spend on other goods and services, which in turn would lower overall gross receipts tax revenues.”
Taxing candy and soft drinks is one of few tax measures Richardson has come out in favor of publicly. He said Tuesday he wouldn’t object to raising “tobacco taxes” and “disclosure taxes that would raise revenues.”
Richardson has shown a much greater dislike for proposals related to the state’s income tax or to proposals that would reduce the state’s business tax credits and incentives.
He reiterated his opposition to proposals targeting the state income tax, although he left the door slightly more ajar than in the past.
When asked if he could support an income tax surcharge on the state’s wealthiest residents, Richardson responded, “It’s on the table. But I ‘m not crazy about it. I don’t want to touch the personal income tax. They have been a boon to creating jobs.”
Then he added, “Everything’s on the table. I am not ruling anything out.”