Battling taxes - municipal governments of New Mexico force state government to modify tax policies

New Mexico Business Journal, August, 1991 by Jack Hartsfield

"If a trucker is inclined to be crooked, he simply doesn't properly report at the end of the quarter - and the burden of proof on what he owes winds up on the state.

"There's a poster about one of the 50 states is missing. That's us," says Clover. "We still don't want the other states to know we're in the union."

Clover, a trucker for 44 years, says he'd also like to see the ton mile tax eliminated and combined on truck registration.

Clover, who runs 20 18-wheelers across the nation and into Canada and Mexico, says he pulled out of New Mexico once and registered in California because of the way the state tax structure treated honest truckers.

Power bloc observers note that New Mexico has a relatively influential transportation-trucking lobby and political donations to particular candidates encourage some to look the other way, particularly regarding the special fuel tax.

The same tax issues are hampering New Mexico's quest for success in the movie industry.

In some cases, movie crews come into New Mexico, hire a number of locals for bit parts or support, but leave their paymaster in Tucson or Phoenix or Los Angeles.

Because the paymaster is operating out of a state where there is no gross receipts tax, New Mexico collects no tax.

Some movie companies find it easier not to operate in New Mexico at all because of the compensating tax.

The film industry spent $21 million in New Mexico last year on production shooting, according to Brett Kamerman, a board member with the New Mexico Film Industry Coalition.

"Frankly, we feel it would have been at least three times that much if it weren't for the gross receipts tax," he says.

"The gross receipts tax kills business in New Mexico," says state Sen. Jim Caudell, R-Bernalillo/Torrance.. "We can't compete with Colorado, Texas, Arizona."

Caudell said there is indeed a tax revolt mentality in New Mexico although the groups represent a wide divergence of special interests - from municipal government to businesses to individual taxpayers.

Because New Mexico is a low income state, personal income bears a higher tax burden than in other states.

In total taxes as a percent of personal income, New Mexico places ninth in the nation. For every $100 earned by a New Mexican, he or she pays out $12.90 in taxes. The national average is $11.56 for every $100.

The single largest source of state and local tax revenues in New Mexico is the gross receipts tax providing nearly 40 percent of total tax collections in 1989 (which will be higher now, compliments of the government gross receipts tax which took effect in July).

Washington state (with no income tax) and Tennessee (which taxes only certain components of income) are the only states that relied more heavily on general sales or gross receipts taxes for the government coffers.

If state severance taxes are excluded from tax collection totals of all states, New Mexico's per capita ranking drops down to 40th.

Severance tax denotes all taxes on the volume or value of minerals extracted, regardless of what the tax is called. About 90 percent of New Mexico's severance taxes are derived from the production of oil and gas.