By Dan McKay
SANTA FE – State Auditor Tim Keller says New Mexico lost about $1 billion in revenue last year because of tax breaks, underscoring the need to scrutinize the effectiveness of the state’s tax system.
The largest share of lost revenue, he said, comes from tax breaks for extractive industries, such as oil, gas and mining. The tax exemptions for food and nonprofit groups are also significant sources of lost revenue, according to a report issued by the Auditor’s Office.
“Last year, we gave over $1 billion in tax revenue to different types of tax breaks with little understanding of whether they are helping to create jobs and strengthen our economy,” Keller, a Democrat, said in a written statement.
Gov. Susana Martinez, a Republican, has repeatedly pushed for an overhaul of New Mexico’s tax code, especially the state’s complex system of gross receipts taxes. But legislation she’s supported has twice failed to make it through the Legislature, once in the regular session earlier this year and again in the special session this month.
Democrats have resisted immediate action. They say the proposals are too complex to rush through without a thorough analysis.
Keller said his office’s study suggests that New Mexico should examine the tax breaks given to oil, gas and mining operations, not just the holes in the gross receipts tax code.
The state should also do a better job of tracking and sharing data that would help the public evaluate whether each tax break is effective, Keller said.
“For years,” he said, “we’ve fought for comprehensive reporting because it’s the key to understanding where to double down and where to stop giving away our tax dollars without a return on investment.”