- Special Sections
- Public Notices
SANTA FE — A bill sponsored by Rep. Eleanor Chavez, D-Albuquerque, that would create greater transparency on tax expenditures and their impact on the state has passed the House of Representatives.
House Bill 161 would require the Secretary of Taxation and Revenue to provide the governor and the legislature with a tax expenditure budget with revenue impacts over $5 million. The bill passed with a vote of 63-0.
Rep. Chavez said, “This transparency measure will provide legislators with a thorough analysis of tax expenditures so that we can get a clearer picture of what’s working for New Mexico and what’s not.
Tax exemptions and credits that provide no significant gain for the state can then be put on the chopping block instead of continuing ineffective policy.”
Tax expenditures are provisions of tax law that provide benefits to particular activities or groups through reduced tax liabilities. Tax expenditures are not limited to economic development incentives. Numerous provisions are designed to provide relief from poverty, sickness or other disadvantages, to encourage the use of renewable energy, or to provide other public benefits (e.g. food tax deductions).
Under HB 161, the tax expenditure budget analysis would include jobs created, significant general fund revenue sources, and tax expenditures.
The information provided to the governor and the legislature would allow them to annually evaluate the effectiveness of tax credits. It will provide information on all foregone revenue; the statutory basis for individual tax expenditures; quantify the state revenue invested; identify the beneficiaries of each tax expenditure; identify significant unintended effects of the tax expenditures; and provide a total of all of the costs in each fiscal year for all tax expenditures.
Currently that information is not readily available from the Taxation and Revenue Department or any other agency.
According to the Legislative Finance Committee, the total general fund revenue foregone in FY12 is estimated at $941.1 million.
Currently New Mexico is one of only seven states that don’t have a tax expenditure budget.