Food, prescriptions should remain tax-free - Albuquerque Journal

Food, prescriptions should remain tax-free

Last week the New Mexico House of Representatives voted unanimously to remove the food tax from House Bill 412, the most comprehensive tax reform legislation in a generation.

New Mexico’s gross receipts or sales tax system is a mess. It is undermined by 383 loopholes, exemptions and deductions for a grab bag of things ranging from fuel for space vehicles to professional boxing matches to recreational vehicle sales. Rep. Jason Harper, R-Rio Rancho, has been thoughtfully leading the fight to close these and dozens of other loopholes and to use the resulting revenue to reduce overall tax rates.

But unlike the special-interest loopholes that HB 412 seeks to close, the food-tax exemption benefits hundreds of thousands of low- and middle-income New Mexico families, as explained most recently in these pages by the New Mexico Voices for Children. As a consequence, the food-tax exemption enjoys wide public support.

Simply put, reimposing the tax on food does not belong in a tax-reform package.

Unfortunately, some senators would like to hijack this tax-reform effort by putting the food tax back into HB 412 or another bill related to the budget, as Gov. Martinez revealed on Tuesday. The food-tax exemption is a big target, worth tens of millions of dollars. Unlike the exemptions, deductions and credits that benefit narrow special interests, the food-tax exemption does not have professional lobbyists defending it. This makes it an attractive target any time there is a budget crunch.

However, one of the core purposes of tax reform is to make New Mexico’s tax system less idiosyncratic and more like the tax structures of other states. Taxing food would take New Mexico in a very different direction from the vast majority of states.

Two-thirds of other states (34) do not impose a sales tax on groceries. This includes our neighbors: Arizona, Colorado and Texas. Before New Mexico repealed its tax on food in 2004, many residents of Las Cruces would drive to El Paso for their weekly grocery shopping, and while they were there, they would shop at other stores in the mall, eat at a restaurant, see a movie and then return with their wallets empty.

HB 412 would also tax prescription medications, like those that lower blood pressure and treat chronic illnesses like diabetes. Illinois is currently the only state in the nation that taxes the sale of prescription medicines, according to the Federation of Tax Administrators.

What if instead of taxing necessities like baby food, fruits, vegetables, and prescription medicines, we taxed alcohol, tobacco, and e-cigarettes somewhat more heavily?

All taxes have collateral negative consequences, but the taxes on alcohol and tobacco actually yield social benefits. Numerous studies have found that higher taxes help discourage young people from smoking and drinking because young people have less discretionary income and are more sensitive to price increases.

In addition, the taxes on alcohol and tobacco do not generate sufficient revenue to compensate the state for the heavy costs of these products, from health care costs to law enforcement expenses.

According to the U.S. Centers for Disease Control and Prevention, New Mexico experiences more alcohol-related deaths per capita than any other state in the nation, including deaths from things like DWI and liver cirrhosis. Yet New Mexico’s excise tax rate on hard liquor is only the 22nd highest in the country. Meanwhile a loophole in the tax code has meant that e-cigarettes have escaped being taxed in the tobacco excise act, so they are taxed much more lightly than any other tobacco product.

Taxes on alcohol and tobacco are the only taxes that the public supports. According to a January 2017 poll by Research & Polling, 66 percent of New Mexicans support increasing taxes on alcohol and tobacco, with only 19 percent opposed and 14 percent neutral. Naturally, unlike food, alcohol and tobacco are protected by teams of high-powered lobbyists.

As the Legislature places the final touches on an urgently needed tax-reform effort, we hope that if more revenue is needed, legislators will listen to their constituents who prefer increasing taxes on harmful luxuries like alcohol and tobacco, rather than imposing new taxes on necessities like food and medicine.

To learn more and contact your legislators, please visit www.thinknewmexico.org.

Home » Opinion » Guest Columns » Food, prescriptions should remain tax-free


Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

1
Inflation complicating tough-on-China arguments
ABQnews Seeker
When a country exports more to ... When a country exports more to other nations than it imports, that country is said to have a trade s ...
2
Texas begins patchwork of social media regulation
ABQnews Seeker
In the decades following the end ... In the decades following the end of the shooting part of the Civil War, midwestern farmers shipped t ...
3
ABQ event gives solar its day in the sun
ABQnews Seeker
National conference, Solar Fiesta, highlight progress ... National conference, Solar Fiesta, highlight progress and challenges to industry ...
4
Court records: Murder suspect works for DEA
ABQnews Seeker
Man charged in shooting death was ... Man charged in shooting death was confidential informant for federal agency
5
NM abortion clinic fields calls from Texas; schedules 'about ...
ABQnews Seeker
New spotlight makes them wary of ... New spotlight makes them wary of the longevity of the state's new role as a haven for abortion care
6
Court records show murder suspect worked for DEA
ABQnews Seeker
Man charged in shooting death was ... Man charged in shooting death was confidential informant for federal agency
7
APD seeks help identifying teen girls killed
ABQnews Seeker
Two young women die in suspicious ... Two young women die in suspicious crash near Central and Tingley
8
APD lieutenant fired in scandal reinstated
ABQnews Seeker
Accusations of overtime abuse led to ... Accusations of overtime abuse led to firing in November last year
9
Brave hearts
ABQnews Seeker
Man's ancestor signed 1776 Declaration of ... Man's ancestor signed 1776 Declaration of Independence