SANTA FE – Holiday shoppers at small businesses would get a tax break under a proposal headed to the Senate floor.
The legislation, House Bill 79, would create a gross receipts tax deduction for sales on the Saturday after Thanksgiving, or “Small Business Saturday,” as supporters call it.
To qualify, a business would have to employ 10 or fewer people. There are other limits, too, such as a $500 cap on how much a person could buy tax-free that day.
Members of the Senate Finance Committed voted 11-1 on Tuesday to endorse the bill and send it on to the full Senate for consideration. If it clears the Senate, the proposal will have to go back to the House for approval of amendments added by senators.
It would also require Gov. Susana Martinez’s signature.
The proposal is co-sponsored by House Majority Whip Doreen Gallegos, D-Las Cruces, and Sen. Steven Neville, R-Aztec. They pitched it as a way to help small local businesses compete with online retailers – because small shops wouldn’t have to charge the usual 7 percent to 8 percent gross receipts tax.
Gallegos described it as “an 8 percent coupon at small businesses.”
The lone vote against the proposal came from Sen. Sander Rue, R-Albuquerque.
He said the bill further narrows New Mexico’s tax base, even as legislators are trying to revise the tax code in the opposite direction. The state needs a comprehensive package of legislation that makes the state tax system more friendly to businesses, he said.
“I’m done with this piecemeal stuff,” Rue said. “I’m to a point where I just have to draw the line.”
Neville said the proposal has a five-year sunset clause, so the idea can be abandoned if it doesn’t actually help businesses.
A nonpartisan analysis completed by staff for the Legislative Finance Committee said the proposal failed to meet any of the LFC’s 11 principles for good tax policy and effective tax breaks – such as keeping the tax base broad and vetting the measure during the interim between legislative sessions.