There was at least consensus on the state’s tax code among many New Mexico executives interested in business: it’s not exactly business-friendly.
State officials Jason Harper, R-Rio Rancho and Patty Lundstrom, D-Gallup, spend time – including at a meeting of the Legislative Finance Committee on July 22 – thinking about ways to make the tax code more user-friendly state and strengthen business development.
âThe tax code is almost the opposite of business friendliness. This particularly penalizes small businesses and makes it extremely difficult for New Mexico to compete, âsaid Harper. âOur gross revenue tax is the biggest problem. “
He said the TSO was more than doubling the tax rate.
âIt’s a hidden tax,â Harper said.
Lundstrom said the state’s economic development department was doing a “complete reorganization” of industries that would best suit the state, citing aerospace and spaceport as examples.
âYou want to make sure that the tax policy is complementary to that, but not so much that you depend on it. In other words, you don’t want this tax policy to be the only reason this company is there, âLundstrom said.
For areas like biotechnology and medical centers, Lundstrom said it would look at existing tax issues that affect those industries. She also said things like tax credits for high wages, incentivizing research and development, and incentivizing the community to provide the necessary infrastructure could be explored.
Lundstrom said property tax, instead of gross revenue tax, could be an option for generating income, while placing more emphasis on research and development, as well as recreational cannabis.
Harper said small businesses in New Mexico are taxed when they buy raw materials, hire an outside company to do the design, or have someone else assemble materials into a product. He also said that these companies are billed again when these products are finally sold.
Harper used Texas sales taxes on electronics as an example of what New Mexico could do, saying companies would only add this tax when those electronics were sold to end consumers.
âInstead of taxing every step of the trade chain, we only tax the last step when the end product is sold,â he said.
If such changes can be made, it would be a âhuge boonâ for small businesses.
Harper said companies would pay less in taxes, meaning they wouldn’t have to charge as much for products and could hire more people or be more competitive.
He has spearheaded an effort to improve the tax code for seven years.
âI spent thousands of hours working on it with experts. I call it my second doctorate; I have done so much research. What we need to do is stop the pyramid that’s happening in our gross revenue tax, âHarper said, adding that he wanted to make it more of a sales tax like other state implementation.