Area lawmakers voted against a bill Friday in the New Mexico House of Representatives to increase fees as well as individual and business taxes, with Republicans decrying the legislation as the biggest tax increase in the state’s history.
House Bill 6, (HB 6), passed the House 40 to 25, according to a roll call published on the official website of the New Mexico Legislature.
All Republicans including Reps. Jim Townsend of Artesia and Roswell Reps. Candy Spence Ezzell, Phelps Anderson and Greg Nibert voted to oppose the bill.
HB 6 would increase the top individual income tax rate from 4.9 to 6.5 percent for single tax payers making $200,000 or more, married couples who file jointly and make $300,000 or more or married couples who file separately and make $150,000, according to a fiscal impact statement on the bill.
Rates on couples and individuals who make less would see smaller increases.
As part of HB 6, the Working Families Tax Credit would double from 10 to 20 percent.
The bill would also make nonprofit hospitals pay the same taxes as for-profit hospitals, repeal part of the Personal Income Tax Capital Gains Deduction, hike the cigarette tax by 10 cents per cigarette, and add e-cigarettes to the list of tobacco products that can be taxed.
Remote sales or sales done over the internet would be subject to a gross receipts tax by state and local governments, according to the fiscal report.
HB 6 also would raise motor vehicle excise taxes from their current 3 percent level to 4.2 percent. Motor vehicle registration fees would also be raised on passenger vehicles and trucks, with that money going to the State Road Fund, according to the report.
In all, the bill would bring in as much as $558 million in state revenue, Anderson said in a phone interview Saturday.
HB 6 is “a broad basket of tax increases under the name of tax reform,” he said.
New Mexico is experiencing a $1.1 billion surplus in the coming fiscal year — which begins in July — and Anderson said he voted against HB 6 because he said it makes no sense to increase taxes at a time when the state is seeing a large influx in revenue.
Proponents of HB 6 said the changes would make the state’s tax code more progressive and allow the state to have a more consistent source of revenue to weather downturns in oil and gas prices or a broader recession.
“It will take every single one of us working together to help pull our kids from the bottom of every list. This cannot solely be on the shoulders of our state government. It will take the public sector, the private sector, and even individual New Mexicans helping to fund a moonshot for our children’s education,” said Rep. Jim Trujillo, D-Santa Fe, and one of the bill’s chief sponsors, in a press release from House Democrats Friday.
Anderson, though, said oil and gas is not to blame for the state’s financial status.
“Stability from tax revenues is always subject to economic forces and to blame oil and gas is simply wrong,” Anderson said.
Some elements of HB 6 are good proposals, Anderson said — like placing a gross receipts tax on online retailers.
“I can’t tell you that every single thing in House Bill 6 was wrong, but when all the dust settles, it is the biggest tax increase in the history of the state of New Mexico,” he said.
During the debate, Townsend said the increased revenue would not be a “moon shot” — a term used by Gov. Michelle Lujan Grisham and other Democrats to describe a significant infusion of dollars into public education — and more like a shot in the dark.
Townsend said the changes the bill makes to the tax code will serve as a dis-incentive for businesses to come to New Mexico to create businesses and attract people to the state.
“We are taking money out of the pockets or opportunity from those we are trying to help,” Townsend said.
The bill now heads to the Senate for further consideration.
Breaking news reporter Alex Ross can be reached at 575-622-7710, ext. 301, or at firstname.lastname@example.org.