Rep. Jason Harper’s sweeping tax reform proposal – viewed by many as part of a possible compromise in the budget debate – deals with corporate income tax, business-to-business tax “pyramiding” and disbursement of the liquor excise tax, but its treatment of the food tax might be its most disputed element.
The bill, sponsored by the Rio Rancho Republican and co-signed by Democratic Sens. John Arthur Smith of Deming and Carlos Cisneros of Questa, proposed reinstating the gross receipts tax on food for most New Mexicans.
A food tax proposal has been brought up frequently in recent years, only to be shot down by critics, many of whom argue the tax would disproportionately affect lower-income families.
A House-approved version of Harper’s bill removed the food tax reimposition from the bill, among other changes aimed at narrowing its scope, but the food tax remains a focus of ongoing discussions over the proposal.
Harper said House Bill 412, in its original form, had provisions to protect the state’s poorest residents. In fact, he said he believes they – and most New Mexico families – would come out ahead under this legislation.
“Families benefit when there are jobs,” he said.
His proposal called for those who get food stamps, a program formally called the Supplemental Nutrition Assistance Program, to not pay the food tax – even on groceries they buy beyond their SNAP benefits. The first bill also would have bolstered a separate tax rebate program for low-income families.
And because the bill would lower the overall gross receipts tax rate, it would create savings on other expenditures.
But one nonprofit organization opposing the bill says the food tax protections might not be enough for low-income households.
Amber Wallin, Kids Count director at New Mexico Voices for Children, said the U.S. Department of Agriculture estimates 24 percent of New Mexicans who qualify for food stamps are not receiving the benefits for various reasons.
Eligibility for SNAP varies by household size, but a family of four can qualify for some benefits with a gross monthly income of $3,342.
Wallin also argues that the tax rebate is not a silver bullet, because it comes only once a year.
“People need to eat every single day,” she said.
Wallin said the organization has not analyzed how the many provisions of Harper’s bill would play out across incomes.
Neither has the Legislative Finance Committee. That’s because of the bill’s complexity and the resources such a study would require, the LFC’s chief economist Jon Clark told the Journal.
Clark said that “initial analysis” indicates SNAP recipients would likely benefit due to the protections Harper built into the bill.
“For other population categories, the impact becomes less certain without thorough analysis,” he said in a written statement.