Just two weeks into the new state fiscal year, the State of New Mexico is struggling with a predicted $160 million shortfall this fiscal year. Sadly, most readers of this news are not surprised given the down economy and the reduction in revenue from taxpayers, tourists and businesses that we all feel.
Unfortunately, today, New Mexico like many other state governments is faced with frightening realities: layoffs, furloughs, extreme budget and service cuts and new taxes.
But with all the conflicting positive headlines of late regarding a rebound, new businesses coming in, the film industry and our booming energy economy, we have to ask “How can New Mexico be broke?” This is a reasonable question when the news this week reads that the state’s treasury is facing deep red ink.
New Mexico’s current monetary misery is due to gross receipts tax not coming in as anticipated, local economies not recovering as fast and state spending beyond its means. No amount of tax magic can make up for the looming $160 million shortfall.
Well then how – like an oil spill in the Gulf – do we plug it up and perhaps end this nightmare? As an advocate for the smart, sensible in-house use and promotion of American petroleum, we are simply succumbing to the pratfalls of the privileged given our plethora of natural resources, creativity and capital potential. Let’s kill some of our outdated tax-exemptions before we make sweeping cuts or hikes. Specifically, let’s kill those tax exemptions that lead many of us to seek tribal lands to buy gas and goods.
And that’s it. $400 million in additional revenue could be generated by closing the tax loophole on gasoline purchased on Native American land alone.
Let’s stop hobbling ourselves. New Mexico, like other Western states, has rightly honored its Native roots and allowed sovereignty to preside over most basic laws and functions, including GRT rules and regulations. This was understandable at one time, but we need to get back on our collective road to recovery.
New Mexico and other states need now to begin taxing its profitable tribes fairly and equitably for gross receipt returns. Many have the casino cash and federally funded subsidies to support their members and operations, and so can afford to allow a fair tax on gas and cigarettes. In other words, everyone should pay the same tax, especially when the break has served its purpose and when our state is so desperate for revenue. After the current crisis, we can revisit the tribal tax tourniquet.
We can no longer afford for gas sold on tribal land to be untouchable.
Restoring reasonable, balanced and fair gas taxes
I understand and respect the fact that sovereign tribes residing in New Mexico and the U.S. West need revenue too, and have every right to gamble on folks’ desire for needful things – and make a profit doing it – but the fairness is missing in the current arrangement and taxpayers should not be the ones to pick up the tab. We simply need lawmakers to restore reasonable, balanced and fair gas taxes. No more breaks, especially now when tribal windfalls have of late led to inefficiencies and/or suspected corruption.
We need to shine a light on this outdated exemption. States should be able to tax gas and other products fairly, evenly and consistently across every mile in their borders, on or with reservations. The resulting revenue can jumpstart government coffers without burdensome tax increases.
The taxes that tribes collect can and should help New Mexico’s economy stand again. After all, the cars that gas up there don’t stay off our roads thereafter.
Baca is state executive for the New Mexico Petroleum Marketers Association.