On Jan. 1, 2005, food bought at New Mexico’s grocery stores was excluded from the gross receipts tax (GRT). In exchange for the break, the GRT was hiked on all other purchases.
A decade later, it’s clear that the tax shift was a mistake.
With several proposals before the legislature to reinstate the GRT on food, it’s time for an honest examination of how and why the well-meaning exemption failed.
While it’s all but forgotten now, many of the state’s liberal activists and organizations opposed ending the food tax. In 2003, New Mexico Voices for Children argued that the “very poorest people will not receive the benefits,” because most “use food stamps, which are not subject to gross receipts taxes.”
Currently, a qualifying New Mexico family of four receives $514.32 per month, tax free, in food stamps. A staggering 21.5 percent of our citizens participate in the federal program.
In addition, many household essentials such as soap, paper products and toothpaste remained taxable. Utility and motor-fuels taxes were not touched, either.