Beware online and soft drink vendors, growers of medical marijuana and big out-of-state corporations — the tax man cometh, maybe

Soft drinks, marijuana sold for its medicinal benefits, even that book you bought online after the holidays could get taxed under various proposals filed this week in the early days of the 2010 legislative session.

Meanwhile, buying a pack of cigarettes may get a lot more costly, too.

Lawmakers have dropped roughly 280 bills, not counting memorials and resolutions, in the opening days of the session, according to the New Mexico Legislature’s website. And quite a few of those proposals are tax bills. The plethora of revenue-raisers reflects the state’s dire financial situation: it’s several hundred million dollars in the hole, and policy makers are trying to figure out how to close the budgetary gap.

Over the next three weeks, state lawmakers will debate how much the final deal to close the budget gap will come from spending cuts and how much from new taxes and fees.

For now, here’s a quick, and by no means, comprehensive list of tax bills culled from the Legislature’s bill locator.

1) A controversial measure would force out-of-state corporations to pay more in corporate income tax. The Independent has written about so-called combined reporting before. It’s a hot-button issue, with the Greater Albuquerque Chamber of Commerce and several big corporations strongly opposed because they say it would send an anti-business message to firms and corporations looking to relocate.

Advocates, however, say the Wal-Marts and Toys R Us’s of the world should pay New Mexico their fair share in taxes. Right now, they say those huge corporations circumvent local taxes through various methods, like using a royalty. Besides, they say, several states have adopted combined reporting over the past decade.

2) A different bill would tax sales of goods purchased over the Internet.

Advocates say it’s fairness issue. Goods purchased at New Mexico brick-and-mortar businesses, say for example the florist down the street, are taxed, so why not items bought online.

The proposal could face an uphill battle.

“I’m not crazy about it,” Gov. Bill Richardson said Thursday when asked about the proposal. “I believe the Internet is free.”

But, he was quick to add, “There are no lines in the sand.”

Taxing online sales isn’t a new idea of course. Other states are already looking at taxing goods purchased over the Internet. And it seems to make a lot of sense. But it’s not as simple as it may sound.

A multi-state corporation would confront a welter of complexity in trying to adhere to a patchwork of states tax codes that levy a tax on online sales. For one thing, not every state defines an item the same way. For example, a belt may be considered clothing in one state’s tax code, and an accessory in another. That matters because clothing (the belt) may get taxed at one rate in one state, but (the belt) as an accessory may get taxed at a different rate in another state.

That’s why there have been national efforts to simplify the states’ tax codes to make taxing online sales easier. It’s a very interesting issue for policy makers and tax code geeks.

3) House Speaker Ben Lujan, D-Santa Fe, is sponsoring one bill already generating a lot of chatter. It would raise the state’s gross receipts tax by a half-cent. If it passed, it would mean a $10 purchase would cost 5 cents more.

He and other supporters say it’s an easy way to raise a lot of money to help close the budgetary shortfall. Richardson has said he isn’t thrilled with the idea. Opponents say it’ll hit the low-income the hardest. They have the least disposal income, so they feel the pinch more of having to pay extra for goods.

4) Lujan’s Taxation and Revenue Committee chairman, Edward Sandoval, meanwhile, is sponsoring a bill that would raise the state income tax on New Mexico’s wealthiest residents through a so-called 1 percent surtax.

Richardson has said he doesn’t like the idea, but he’s left the door open — twice.

5) New Mexico is one of more than a dozen states to allow the sale of marijuana to individuals in need of its medicinal benefits. Now there’s a proposal to tax the sale of medicinal cannabis.

As the bill puts it:

For the production of medical marijuana in New Mexico to be distributed in the ordinary course of business, there is imposed an excise tax at the rate of twenty-five percent of the product value of the medical marijuana.

6) Conventional wisdom around the Capitol is that the so-called sin taxes — levies on cigarettes and liquor — will be the easiest to raise. The governor’s already signaled he’s on board.

A perusal of bills dropped this week show there already are competing proposals to raise the cigarette excise tax. Both bills would hike the levy by varying amounts depending on how many cigarettes are in a pack. Here’s one proposal. Here’s the other.

7) Meanwhile, there’s been much talk about whether to remove the food exemption from the state’s gross receipts tax. One lawmaker has filed a proposal to limit items covered by the food exemption to staple foods such as meat, eggs, produce, etc. Richardson pretty much put the kabash on dismantling the broad food exemption this week, saying he opposes repealing the exemption.

But he has continued to say he’d like to close loopholes in the food exemption, like say taxing soft drinks, which aren’t taxable thanks to the food exemption. Lawmakers already have filed a proposal that would remove soft drinks out from under the food exemption.

8) Finally, there’s a proposal that wouldn’t tax anything, but it would tell the public how the state uses tax credits, exemptions and deductions. The proposal would require the state not only to list every credit, exemption and deduction but estimate also how much it costs the state in lost revenue. The state forgoes collecting a certain amount of tax revenue every time it creates a tax credit, incentive or deduction.

Called a tax expenditure report, the list is not a new idea. Most states already compile a version of such a report. The Independent has written about tax expenditure reports, which has the support of left- and right-learning organizations.

For example, tax incentives that go to film production companies working in New Mexico is one of the biggest tax expenditures. The film incentives fall under the state’s Business Incentive Tax Program.  Thanks to a mini-tax expenditure report produced by the state’s Tax and Revenue Department, we know those incentives are expected to cost the state $80 million to $100 million a year in lost dollars. Of course Richardson says the incentives more than pay for themselves by bringing a much-needed jolt to the economy through new jobs, spending by the companies and exposure: MovieMaker magazine just ranked Albuquerque the best place to live and work if you’re an independent filmmaker. And he’s told state lawmakers he’s vehemently opposed to any proposals that would reduce or kill the film production tax credit.

9) But that hasn’t stopped one lawmaker from trying to end the film incentive program. Such a proposal was filed this week, too.