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SANTA FE — A proposal to temporarily increase New Mexico’s gross receipts tax to help balance the state budget cleared its first hurdle in the Legislature on Thursday.
The measure would provide about $238 million next year by raising the tax by one-half cent to 5.5 percent. The tax rate would then decline annually until it returned to 5 percent starting in July 2014.
The House Business and Industry Committee endorsed the measure on a party-line 7-4 vote, with Republicans opposing it. The panel shelved several other bills to raise revenues, including one to increase the tax on cigarettes by $1 a package.
The gross receipts tax proposal has a powerful supporter in the Legislature with House Speaker Ben Luján, D-Santa Fe, as its main sponsor.
Luján’s backing greatly improves the chances for the bill to win approval in the Democratic-controlled House. However, tax increases are expected to run into stronger opposition in the more conservative Senate.
Luján told committee members that higher taxes were necessary for New Mexico to plug a budget shortfall next year and prevent cutbacks in public schools and government services.
“We don’t take pride in coming to increase revenues or taxes,” he said.
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