Lawmakers mull consumption tax

Posted at: 01/31/2013 5:43 PM
Updated at: 01/31/2013 6:35 PM
By: Stuart Dyson, KOB Eyewitness News 4

Who wouldn't want simpler taxes? State lawmakers are getting their first glimpse at a plan that would overhaul the state's convoluted tax system and replace it with something that's a lot easier to understand.

The idea is to get rid of just about every kind of tax there is and just charge people a low tax on everything they buy. Everything. No exceptions. They call it a consumption tax.

Right now there are so many exemptions and credits and deductions on the state gross receipts tax it takes an Einstein to figure it all out. On top of that there are the other taxes, too.

The consumption tax would slap a two percent rate on all goods and services, far lower than what New Mexicans are paying now, but remember - no exceptions.

The legislation is the brainchild of two Republican state lawmakers from Farmington.

"Corporate income tax goes away," said Sen. William Sharer. "Personal income tax goes way. All of the special taxes that we have go away. We have one broad-based, very simple, very low tax."

"When they go to buy clothing, instead of paying 7 percent, or 8 percent if they live in Santa Fe, they'll pay 3 percent," said Rep. Tom Taylor. "That's 2 percent for the state and the 1 percent is for the local government."

Sharer and Taylor say the consumption tax would generate essentially the same revenue for the state that the current system does.

The legislation would bring back taxation on grocery purchases, but at a much lower rate than the one the state got rid of a few years ago.

For example, a $50 sack of groceries? A buck for the state, 50 cents or so for the local government. A $10,000 car? $200 for the state. A $1,000 TV set? $20 tax.

No two percent tax on gasoline, though - that state tax would stay at $0.17 a gallon.

The bill does include a tax refund system for low income New Mexicans.

The architects of the legislation realize it might not happen - in fact probably won't happen - during this year's session. But they think it will catch on eventually with lawmakers and taxpayers. Some Democratic lawmakers we spoke with said they like the concept, but they want to know the details of how this thing would work.