FARMINGTON — Stephanie George just wanted to take her family on a small shopping excursion.
The 37-year-old mother was in SnS Skateshop in downtown Farmington late Thursday afternoon with her three children and spent more than $30 for a pair of sunglasses and a hat.
Though she was happy about spending time with her children, she said she didn't like recent gross receipts tax increases.
Last year, the San Juan County Commissioners voted to raise the gross receipts tax by 0.0625 percent, about 6 cents per $100 spent, in a complicated tax structure only a handful of states in the country share.
Though the increase doesn't seem like very much, George said taxes hinder her ability to provide basic needs for her family.
"I don't like tax increases because my family and I live paycheck to paycheck and it's not enough," said the Fruitland resident.
SnS Skateshop owner Daniel Diswood said he generally doesn't like tax increases because his customers don't like increases, but he does see positives in taxes.
"If taxes are going to improve the town, then I don't mind," he said.
Ray Hagerman, chief executive officer of the Four Corners Economic Development, said the tax helps cities pay for services.
"I think, the thing we have to remember — the cities have to pay their bills and they have to provide their services so we can't be too critical (of tax increases)," Hagerman said in a phone interview.
He said with the most recent increase to the gross receipts tax shouldn't hurt small businesses to any great degree, but said the tax structure itself needed some changes.
"Anytime you're talking about a small business, there is always a steep learning curve and a complicated tax structure doesn't help," he said.
Most states in the country implement a state sales tax, but in New Mexico, the gross receipt tax is a complex tax that allocates 5.125 percent of the tax to the state, while cities or counties get the remainder of the tax. In San Juan County, Aztec businesses pay the highest taxes at 7.8125 percent, which is up from 7.75 percent last year.
The complexity in the tax structure comes from the different transactions that can be taxed, exempted or credited. That system sets New Mexico apart from other states, he said.
"I think what will help us is to simplify the tax and that will make us more business friendly," Hagerman said.
Rep. Thomas Taylor, a Farmington Republican, said he agrees that the gross receipts tax needs to be simplified.
He said the tax has been amended so many times that there are no simple solutions when looking for a replacement.
Some problems arise because services, such as doctor visits or other professional services are taxed and in other states services are not taxable transactions. To make New Mexico more competitive compared to other states, lawmakers have made amendments to the gross receipts tax giving exemptions and credits to various business transactions.
To complicate matters further, Taylor said, the gross receipts tax laws are vague about tracking such credits and exemptions, thus making any proposed simplification difficult.
Another part of the tax says that if a finished product is made from parts made in New Mexico, each part and each service — such as engineering — to build the final product is suspectable to the gross receipt tax, which adds to the final cost of the product.
"We're going to be doing some real serious studies with tax experts to produce a data set from which we can begin to see a solution," he said.Erny Zah is The Daily Times business editor. He can be reached at 505-564-4638.and email@example.com. Follow him @ernyzah on Twitter.