Lawmakers offer competing plans to reduce tax ‘pyramiding’

Gov. Susana Martinez at Wednesday's news conference. (photo by Gwyneth Doland)

Gov. Susana Martinez on Wednesday endorsed a plan (HB 184) by Rep. David Doyle, R-Albuquerque, that would give the construction industry a break on gross receipts taxes.

Reducing the “pyramiding” of taxes in the industry would spur growth, create jobs and result in less expensive homes and office buildings, the governor said while surrounded by builders and business leaders. (I live streamed some of the press conference from my phone; you can see that video here.)

Many Democrats agree pyramidding is a problem. Sen. Steve Fischmann, D-Las Cruces, has introduced a bill (SB 74) that would provide a “business services tax credit” on services provided to another business (again, pyramiding), but it also includes a somewhat complicated  package of proposals to pay for that tax break.

That package includes a combined reporting proposal to force out-of-state corporations to pay taxes in New Mexico and changes to the motor vehicle excise tax that would eliminate the tax break on trade-ins for new car sales.

Sen. Steve Fischmann

Asked about Fischmann’s plan, Martinez objected generally to the combined reporting part and more specifically to raising taxes on car sales.

But on Wednesday afternoon, Fischmann indicated he is seriously considering dropping that part of the bill, saying, “the governor may have a point there.” See the video for his full explanation.

Will either of these bills make it through?

The powerful Senate Finance Committee chairman, Sen. John Arthur Smith, D-Deming, warned on Wednesday of caution in offering more deductions from the broad-based tax, especially if natural gas prices continue to put less money in the state coffers and especially if the breaks don’t work as hoped.

For more on this subject, watch my interviews with Martinez, Doyle, Fischmann and Smith on this week’s episode of “New Mexico in Focus.”

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