State senators propose taxing food, but opponents say that could hurt low-income people
FARMINGTON — Taxing food could provide needed revenue to counties and cities struggling to provide services, but opponents say it will disproportionately impact low-income New Mexicans.
Two bipartisan bills in the state Senate propose reimposing gross receipts tax on food.
Gross receipts taxes on food were repealed in 2005 and the state implemented additional taxes on other items to provide hold harmless payments to offset lost revenue to cities and counties.
Now those hold harmless payments are being phased out, and local governments like Farmington and San Juan County have imposed additional gross receipts tax to make up for the millions of dollars they will lose as the payments vanish.
Opponents point out that low income people spend a greater percentage of their pay on food than their counterparts.
While food stamp recipients do not pay tax on food, a December 2018 poll found 22 percent of New Mexicans that are eligible for federal Supplemental Nutrition Assistance Program benefits do not receive those benefits, according to a fact sheet by New Mexico Voices for Children.
The fact sheet cites a 2011 U.S. Department of Agriculture report that 80 percent of SNAP benefits are used in the first half of the month. In addition, a 2010 report by the New Mexico Association of Food Banks found low-income New Mexicans skip an average of three meals a week, the fact sheet states.
But those additional gross receipt taxes could be eliminated if Farmington and San Juan County could impose a tax on food, according to Sen. Steve Neville, R-Farmington.
“Because we are broadening the tax base for everyone, everyone will be paying a lower tax rate on the items they buy,” Neville said in a press release. “This is good news for our local communities who need a stable funding source to plan for their local services.”
Neville has introduced a bill that would allow local governments to choose if they will tax food. This bill is co-sponsored with Sen. John Arthur Smith, D-Deming.
Smith is also sponsoring the other bill, along with Sen. Stuart Ingle, R-Portales.
“This helps our local cities and counties stabilize their funding source,” Neville said. “This will have a strong impact on the cities and counties of Northwestern New Mexico, like Aztec, Farmington and San Juan County. We are in a regional trade area where a lot of people travel here from out of state or out of town to buy food in our area They have not been paying any taxes since food was exempt from the gross receipts tax (GRT) several years ago and this has negatively impacted our local governments' ability to provide goods and services in our community.”
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at firstname.lastname@example.org.