Editorial Board, Santa Fe New Mexican
February 8, 2017
Good for Republicans and Democrats in the state House of Representatives.
They understand that New Mexico needs additional revenue to do the work of government, and more importantly, the state’s small business owners deserve a level playing field to compete with big, out-of-state online retailers. A solution to both challenges is collecting gross receipts taxes from giant internet retailers such as Amazon or eBay.
Republicans and Democrats in the House Business and Industry Committee endorsed legislation on a 7-1 bipartisan vote. The bill is wisely called the Local Business Fairness Act and was introduced by Rep. Carl Trujillo, D-Santa Fe. House Bill 202 requires that even companies without a physical presence in the state pay the same taxes as the shops and stores owned by our neighbors. His bill smartly focuses on businesses that generate more than $100,000 a year in gross receipts taxes.
Such an online tax proposal has been discussed in the past, but for various reasons, never went far in New Mexico. For a time, collecting such taxes from companies that lacked a physical presence in the state was held to be illegal; new court rulings have changed that perspective, and such taxes are being charged across the country. Then, there was the futility of passing such tax legislation. After all, Gov. Susana Martinez has been opposed to any new taxes, and she was likely to use her veto pen to stop any such laws. Her position is unchanged, but as legislators are pointing out, an online gross receipts tax is less a “new” tax than it is closing a loophole.
The new incentive this year, though, might be the recognition that many local business owners believe that taxing online sales is necessary to their survival. If everyone pays the same taxes on all purchases, local businesses can better compete with online sellers. With local gross receipts taxes close to 9 percent in some cities and counties, buying online can save shoppers serious bucks. Yet, those dollars don’t recirculate in the community, and Amazon employees don’t spend their paychecks in our towns and cities. Shopping locally is good not just for the business owners, but for their workers and for the cities and counties where the businesses operate.
How much money an online tax would mean for empty state coffers is unknown. Estimates start as low as $8 million a year and go as high as $30 million. Millions more would go to local city and county governments; that’s important considering those local governments are hurting for revenue, too. Considering that budget fixes for the current fiscal year resulted in raids of school district reserve funds — some districts barely will have 2 percent of their budget socked away as a result — it is undeniable that more revenue is desperately needed.
Groups supporting the measure rarely agree — yet everyone from the Greater Albuquerque Chamber of Commerce, New Mexico Voices for Children and AARP is behind it. Such broad support, with key members of both parties backing the legislation, gives us hope that Gov. Martinez might be persuaded to sign the measure. As Trujillo told the committee hearing, “The executive branch is open to closing loopholes because they realize that’s something that is good government, good policy.”
Now, the bill is off to the House Taxation and Revenue Committee and still must clear the House floor before going on to the Senate. Taxing sales of online goods is smart policy and smart politics, boosting local economies across the state. The Legislature should pass the Local Business Fairness Act, and Gov. Martinez needs to sign it.
Copyright 2017, Santa Fe New Mexican (http://www.santafenewmexican.com/opinion/editorials/our-view-tax-fairness-good-for-new-mexico/article_e4557038-c1bd-56c6-81f6-b54642fde59d.html)