OPINION: Paid family and medical leave would be largest tax increase in NM history

The New Mexico state Legislature is getting underway, and it appears some in the state Capitol didn’t get the post-Election Day memo: Your constituents are struggling with record-breaking costs.

Our pocketbooks have been hit hard. We need legislators working to decrease our costs, not increase them with massive tax increases in this upcoming session.

Sadly, at least two policy proposals being discussed would significantly raise our taxes and devastate the hospitality sector, which is still reeling post-pandemic. As CEO of the New Mexico Restaurant Association, I’m proud to represent the state’s 3,600 restaurants, which employ more than 11% of New Mexicans.

People haven’t been going out as much since the pandemic, partly because they cannot afford to. Making costs higher through new taxes will only make things worse.

What legislators are not telling you about the paid family and medical leave legislation is that it represents the largest tax increase in New Mexico’s history, funded entirely through an additional payroll tax on working families and businesses.

Instead of utilizing the state’s surplus revenue, lawmakers are imposing this financial burden on employees and employers, risking further hardship for families. This approach raises concerns about legislators’ priorities, as they choose to put the cost onto constituents rather than invest in their well-being.

If the state wants to prioritize these entitlements, it should fund such initiatives rather than impose tax increases on people struggling to make ends meet.

Once again, New Mexico’s restaurants, bars, grocers, and mostly their customers are being asked to bear the burden of a significant tax increase on alcohol. One proposal raises the alcohol excise tax from $50 million to $222 million. The other proposal requires retailers to add the tax at the cash register. Both proposals are unacceptable, particularly given the state’s budget surplus.

Some lawmakers say this isn’t about revenue and increasing prices will curb drinking problems, but numerous studies have proven this false. Last year, the Oregon Health Authority’s study found their proposed 2,400% tax increase on alcohol could maybe decrease consumption by only 3% to 5%, and likely less than 1% for problem drinkers because of the substitution effect.

Addiction is not a rational behavior, and therefore, when you drive up the price of alcohol, people with a problem will instead use cheaper substances, like fentanyl. So, we solve our alcohol problem with a fentanyl epidemic.

Lawmakers should utilize existing funds if drug addiction and recovery services are indeed a priority. These businesses already contribute $50 million in alcohol tax revenue for the state annually, yet 50% of it goes to the general fund instead of being dedicated to drug addiction and recovery services. New Mexico is also receiving $200 million from the opioid settlement, which will be a steady stream of funding for drug addiction and recovery services.

New Mexico’s restaurants, bars, breweries, wineries, and distilleries are grappling with unprecedented challenges. They are navigating the storm of inflation, employee shortages, and the lingering effects of a pandemic, all while facing a declining trend in alcohol consumption and declining sales. These local businesses urgently need the support of lawmakers to ensure their survival.

Imposing tax hikes, whether through payroll taxes or alcohol taxes, should not be a priority for this Legislature. Constituents will feel the impact of these tax increases when their paychecks shrink and they seek solace in a well-deserved beer after a long week of hard work.

The last thing New Mexicans need are tax increases and higher prices. I urge New Mexico’s lawmakers to reconsider tax increases when most of us struggle to survive.

Carol Wight is CEO of the New Mexico Restaurant Association.