Copyright © 2021 Albuquerque Journal
SANTA FE – A key Senate committee on Thursday removed tax hikes for New Mexico corporations and higher-income residents from a House-approved tax package, giving a victory to corporate groups that had raced against proposed tax changes.
After the tax hikes were removed from House Bill 291, the Senate Finance Committee voted 7-4 to approve the reduced bill to extend two tax breaks for low-income New Mexico workers to the Senate 7: 4 to advance.
Without the tax increases, the more generous tax credits would cost the state an estimated $ 70 million annually. However, a $ 7.4 billion budget bill nearing final approval at the Roundhouse is responsible for the price – at least for the coming fiscal year.
“It’s not all we wanted … but at least we’re helping people who need it across the state,” said Senator George Muñoz, D-Gallup, chairman of the committee, during Thursday’s hearing.
He also said the timing is not right for tax hikes as many companies are still struggling with the COVID-19 pandemic.
The committee’s hearing was controversial and at one point a business owner was accidentally overheard on the online webcast with a swear word, apparently relating to lawmakers, accusing him of “trying to throw taxes on us”.
This led to criticism from Muñoz, who said the individual could not attend future committee meetings.
In addition, Senator Jacob Candelaria, Albuquerque D-Albuquerque said the hot microphone comment made attitudes of many corporate groups as “clear as the day”.
“I don’t believe in predatory, exploitative capitalism and I think we should invest in people,” said Candelaria.
Proponents of the original bill argued that it would make New Mexico’s tax laws more progressive while diversifying the state’s revenue base. Tax and royalty money for the oil and natural gas industry, a historically volatile source of income, currently accounts for more than 40% of total government revenue.
However, critics said the higher rates could be detrimental to businesses and lead to job losses in New Mexico.
“Tax increases – especially when the state is cashless – can increase the treasury, but it is not the way to grow our economy,” said Terri Cole, CEO and President of the Greater Albuquerque Chamber of Commerce, after Thursday’s vote.
The provisions that were removed from the tax package included provisions to increase corporate tax over several years and to introduce new top income tax brackets with a new top bracket of 6.5% – up from 5.9% under the state’s current tax laws .
Top Senate Democrats had previously advocated a “revenue-neutral” tax package. An expected influx of federal incentive dollars and projected cash reserves of $ 2.7 billion gave the state the opportunity to make major changes to its tax laws.
In the meantime, the provisions still in the bill would expand the tax benefits offered by the comprehensive low-income tax break and the working family tax credit.
The tax credit would also be expanded to allow an estimated 41,6000 New Mexicans between the ages of 18 and 24 to qualify. And it would extend the tax break to those who work legally and who are not US citizens. “
If the tax package were approved by the entire Senate, it would have to be sent back to the house because of the changes.
Both houses would have to sign the same version of the bill before the end of the 60-day term on Saturday to send it to Governor Michelle Lujan Grisham for final approval.