New Mexico Tax Expenditure Reporttax.newmexico.gov/.../2016_Tax_Expenditure_Report_Final.pdf · 2017-02-06 · Advanced Energy Credit against GRT, Compensating Tax, Withholding Tax,

2016

New Mexico Taxation and Revenue Department

NewMexicoTaxExpenditureReport

TAXEXPENDITUREREPORT

2016NewMexicoTaxExpenditureReport Pageii

TABLEOFCONTENTS

Tax Expenditure Report ................................................................................................................................. i

Secretary’s Message ................................................................................................................................... 11

Brief Summary of New Mexico’s Major Taxes ............................................................................................ 12

Tax Expenditures ......................................................................................................................................... 18

Notes About Types of Tax Expenditures ............................................................................................. 20

Notes about the Data .......................................................................................................................... 21

Categorizing Expenditures .................................................................................................................. 23

Advanced Energy Credit against GRT, Compensating Tax, Withholding Tax, PIT, or CIT ....................... 25

Advanced Energy GRT and Compensating Tax Deduction ...................................................................... 27

Affordable Housing Credit against Modified Combined Tax, PIT, or CIT ................................................ 29

Agricultural Biomass Credit against PIT and CIT ..................................................................................... 31

Agricultural Water Conservation Expenses Credit against PIT and CIT .................................................. 33

Aircraft Sales or Services GRT Deduction ................................................................................................ 35

Alternative Energy Product Manufacturers Credit Against Modified Combined Tax ............................. 36

Angel Investment Credit against PIT ....................................................................................................... 38

Apportionment Election of CIT for Manufacturers ................................................................................. 40

Apportionment Election of CIT For Headquarters .................................................................................. 42

Armed Forces Salaries Exemption from PIT ............................................................................................ 43

Back‐to‐School Tax‐Free Weekend GRT Deduction ................................................................................ 44

Biodiesel Blending Facility Tax Thirty Percent Credit Against GRT and Compensating Tax ................... 45

Biomass‐Related Equipment and Biomass Materials Deduction from Compensating Tax .................... 46

Blended Biodiesel Fuel Credit against PIT and CIT .................................................................................. 48

Border‐Zone Trade‐Support Company GRT Deduction .......................................................................... 49

Buses Operated by Religious and Nonprofit Charitable Organizations Exemption from WDT .............. 51

Buses Used for Transportation of Agricultural Laborers Exemption from WDT .................................... 52

Business Facility Rehabilitation Credit against PIT and CIT ..................................................................... 53

Capital Gain Deduction from PIT ............................................................................................................. 54

Certain Disabled Military Veteran Exemption from MVX ....................................................................... 56

Child Care to Prevent Indigency Credit against PIT ................................................................................. 57

Coal Exemption from Severance Surtax .................................................................................................. 58

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Commercial Motor Carrier Vehicles Operating Exclusively within 10 Miles of Mexico Border Exemption

from Trip Tax and WDT ........................................................................................................................... 60

Construction Equipment and Materials Used in the Construction of Sole Community Provider

Hospitals GRT Deduction ........................................................................................................................ 62

Construction of Sole Community Provider Hospitals GRT Deduction .................................................... 63

Contributions of Inventory to Nonprofit Organizations or Governmental Agencies Deduction from

Compensating Tax ................................................................................................................................... 65

Conveyance of Land for Conservation or Preservation Fifty Percent Credit against PIT and CIT ........... 66

Corporate‐Supported Child Care Credit against CIT ............................................................................... 68

Disabled Person Exemption from MVX ................................................................................................... 69

Disabled Street Vendors Exemption from GRT ....................................................................................... 71

DOH‐Licensed Hospitals Credit against GRT ........................................................................................... 72

DOH‐Licensed Hospitals Fifty Percent GRT Deduction ........................................................................... 74

Education Trust Fund Payment Deduction from PIT .............................................................................. 75

Electric Transmission and Storage Facilities GRT and Compensating Tax Deduction ............................ 76

Electric Transmission and Storage Facilities Services GRT Deduction .................................................... 78

Electricity Conversion GRT Deduction .................................................................................................... 79

Electricity Exchange GRT Deduction ....................................................................................................... 80

Electronic ID Reader Credit against PIT and CIT...................................................................................... 81

Excess of Elderly Taxpayers Maximum Property Tax Liability Rebate from PIT ..................................... 82

Fees from Social Organizations Exemption from GRT ............................................................................ 83

Film and Television Credit against PIT and CIT ....................................................................................... 84

Fuel for Space Vehicles Exemption from GRT and Compensating Tax ................................................... 87

Geothermal Ground‐Coupled Heat Pump Credit against PIT and CIT .................................................... 88

Goods and Services for the DOD Related to Directed Energy and Satellites GRT Deduction ................. 89

Health Care Practitioner Services GRT Deduction and Hold Harmless Distribution ............................... 90

Hearing and Vision Aids GRT Deduction ................................................................................................. 92

High‐Wage Jobs Credit against Modified Combined Tax ........................................................................ 93

Hosting World Wide Web Sites GRT Deduction ..................................................................................... 96

Hybrid Vehicle Exemption from MVX ..................................................................................................... 97

Investment Credit against GRT, Compensating Tax, or Withholding Tax ............................................... 98

Investment Management or Advisory Services GRT Deduction ........................................................... 100

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Jet Fuel Fifty‐Five Percent GRT and Compensating Tax Deduction ...................................................... 101

Job Mentorship Credit against PIT and CIT ........................................................................................... 102

Laboratory Partnership with Small Business Credit against GRT .......................................................... 103

Loan‐Related Costs GRT Deduction ...................................................................................................... 104

Locomotive Engine Fuel GRT and Compensating Tax Deduction ......................................................... 105

Lottery Retailer Receipts GRT Deduction .............................................................................................. 107

Low‐ and Middle‐Income Taxpayers Exemption from PIT .................................................................... 108

Low‐Income Comprehensive Tax Rebate and Property Tax Rebate against PIT .................................. 109

Medical and Health Care Services GRT Deduction ............................................................................... 111

Medical Care Savings Account Exemption from PIT ............................................................................. 113

Microbrewer Beer and Small Wineries Rate Differential from Liquor Excise Tax ................................ 114

Military Construction Services GRT Deduction ..................................................................................... 116

Military Transformational Acquisition Programs GRT Deduction ......................................................... 117

Natural Gas Exemption from Oil and Gas Severance Tax ..................................................................... 118

Natural Gas Rate Differential from Oil and Gas Emergency School Tax ............................................... 119

Natural Gas Rate Differential from Oil and Gas Severance Tax ............................................................ 120

Newspaper Sales GRT Deduction .......................................................................................................... 122

New Mexico National Guard Member Premiums Paid for Group Life Insurance Exemption from PIT 123

Nonathletic Special Event at New Mexico State University GRT Deduction ........................................ 124

Nonprofit Elderly Care Facility Exemption from GRT ............................................................................ 125

Nonprofit Organizations Exemption from GRT ..................................................................................... 126

Nonprofit Organizations Fundraisers GRT Deduction ........................................................................... 128

Officiating at New Mexico Activities Association Events Exemption from GRT ................................... 130

Oil and Other Liquid Hydrocarbons Exemption from Oil and Gas Severance Tax ................................ 131

Oil and Other Liquid Hydrocarbons Rate Differential from Oil and Gas Emergency School Tax .......... 132

Oil and Other Liquid Hydrocarbons Rate Differential from Oil and Gas Severance Tax Rate .............. 133

Organ Donation Deduction from PIT .................................................................................................... 134

Penalty Pursuant to Section 7‐1‐71.2 NMSA 1978 Credit against GRT, Compensating Tax and

Withholding Tax .................................................................................................................................... 135

Persons One Hundred and Older Exemption from PIT ......................................................................... 136

Persons Sixty‐Five and Older or Blind Exemption from PIT and A Comprehensive Tax Rebate ........... 137

Physician Participating in Cancer Treatment Clinical Trials Credit against PIT ..................................... 139

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Prescription Drugs and Oxygen GRT and GGRT Deduction .................................................................. 140

Preservation of Cultural Property Credit against PIT and CIT ............................................................... 141

Production or Staging of Professional Contests GRT Deduction .......................................................... 142

Publication Sales GRT Deduction .......................................................................................................... 143

Purses and Jockey Remuneration at New Mexico Racetracks Exemption from GRT ........................... 144

Railroad Equipment, Aircraft, and Space Vehicles Exemption from Compensating Tax ...................... 145

Real Estate Transactions GRT Deduction .............................................................................................. 146

Renewable Energy Production Credit against PIT and CIT .................................................................... 147

Research and Development Small Business Credit against GRT or Fifty Percent Credit against

Withholding Tax .................................................................................................................................... 149

Rural Health Care Practitioner Credit against PIT ................................................................................. 151

Rural Job Credit against Modified Combined Tax, PIT, and CIT ............................................................ 153

Sale and Use of Agricultural Implements, Farm Tractors, Aircraft, and Motor Vehicles that Don’t Have

to be Registered GRT and Compensating Tax Deduction ..................................................................... 155

Sale of Certain Services to an Out‐of‐State Buyer GRT Deduction ....................................................... 158

Sale of Food at Retail Food Stores GRT Deduction and Hold Harmless Distribution ............................ 159

Sale of Software Development Services GRT Deduction ...................................................................... 161

Sale of Textbooks in Certain Bookstores Exemption from GRT ............................................................ 162

Sales to Nonprofit Organizations GRT, GGRT, and Compensating Tax Deduction ............................... 163

Sales to Qualified Film Production Company GRT and GGRT Deduction ............................................. 165

Sales to State‐Chartered Credit Unions GRT and GGRT Deduction ...................................................... 166

Solar Energy Systems GRT Deduction ................................................................................................... 167

Solar Market Development Credit against PIT ...................................................................................... 168

Spaceport‐Related Activities GRT Deduction ........................................................................................ 170

Space‐Related Test Articles Deduction from Compensating Tax .......................................................... 171

Special Needs Adopted Child Credit against PIT ................................................................................... 172

Sustainable Building Credit against PIT and CIT .................................................................................... 173

Tax Stamps Rate Differential in Cigarette Tax ...................................................................................... 175

Technology Jobs and Research and Development Credit against GRT, Compensating Tax, Withholding

Tax, PIT, or CIT ....................................................................................................................................... 176

Test Article Deduction from Compensating Tax ................................................................................... 178

TIDD – Tax Increment for Development District Dedicated Increments .............................................. 179

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Uranium Enrichment Plant Equipment Deduction from Compensating Tax ........................................ 180

Uranium Hexafluoride and Uranium Enrichment GRT Deduction ........................................................ 181

Unreimbursed or Uncompensated Medical Care Expenses Credit From PIT ....................................... 182

Unreimbursed or Uncompensated Medical Care Expenses Deduction From PIT ................................ 183

Unreimbursed or Uncompensated Medical Care Expenses Exemption From PIT ................................ 184

Vehicles Titled before July 1, 1991 Exemption from LVGRT ................................................................. 185

Venture Capital Investment Credit against PIT ..................................................................................... 186

Veteran Employment Credit against PIT and CIT .................................................................................. 187

Welfare‐to‐Work Credit against PIT and CIT ......................................................................................... 188

Wind and Solar Generation Equipment GRT Deduction ....................................................................... 189

Working Families Credit against PIT ..................................................................................................... 190

Not Tax Expenditures ................................................................................................................................ 191

Accredited Diplomats and Missions GRT Deduction ............................................................................ 192

Acquisition of Vehicle for Subsequent Lease Exemption from MVX .................................................... 192

Acquisition of Vehicle More than 30 Days Before Moving to NM Exemption from MVX .................... 193

Athletic Facility Surcharge Exemption from GRT and GGRT ................................................................. 193

Bad Debts Deduction from ITGRT ......................................................................................................... 194

Biodiesel for Subsequent Blending or Resale by a Rack Operator Deduction from Petroleum Products

Loading Fee ........................................................................................................................................... 194

Boats Exemption from GRT and Compensating Tax ............................................................................. 195

Business Located on Land Owned by the Municipality but Outside the Municipal Boundaries

Exemption from Supplemental Municipal GRT and Municipal Local Option GRT ................................ 195

Certain Retail Sales of Gasoline on an Indian Reservation, Pueblo Grant or Trust Land Deduction from

Gasoline Tax .......................................................................................................................................... 196

Charitable Organizations Exemption from PIT ...................................................................................... 196

Chemicals and Reagents GRT Deduction .............................................................................................. 197

Construction Material GRT Deduction .................................................................................................. 197

Construction Services and Construction‐Related Service GRT Deduction ............................................ 198

Dividends and Interest Exemption from GRT ....................................................................................... 198

Dyed Gasoline Used for Off‐Road Transportation Deduction from Gasoline Tax ................................ 199

Dyed Special Fuel Deduction from Special Fuel Excise Tax ................................................................... 199

Event Center Surcharge Exemption from GRT and GGRT ..................................................................... 200

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Films and Tapes GRT Deduction ........................................................................................................... 200

Food Stamps/SNAP Exemption from GRT ............................................................................................. 201

Fuel Exemption from GRT and Compensating Tax ............................................................................... 202

Gasoline or Special Fuels Returned to the Refiner as Uncollectible Deduction from Petroleum Products

Loading Fee ........................................................................................................................................... 202

Income Allocation and Apportionment Credit against CIT ................................................................... 203

Indians Exemption from PIT .................................................................................................................. 203

Insurance Companies Exemption from CIT ........................................................................................... 204

Intergovernmental Coal Severance Credit against Coal Severance Tax ............................................... 204

Intergovernmental Credit against CIT ................................................................................................... 205

Intergovernmental Production and Intergovernmental Production Equipment Credit against Oil and

Gas Severance Tax, Oil and Gas Conservation tax, Oil and Gas Emergency School Tax, and Oil and Gas

Ad Valorem Production Tax .................................................................................................................. 206

Internet Services GRT Deduction .......................................................................................................... 207

Interstate Sales of Spirtuous Liquors, Beer, & Wine and Winegrower‐to‐Winegrower Transfers

Deduction from Liquor Excise Tax ......................................................................................................... 207

Interstate Sales of Tobacco Deduction against Tobacco Products Tax ................................................. 208

Interstate Telecommunications Services Exemption from GRT ........................................................... 208

Interstate Commerce Transactions Deduction from LVGRT ................................................................. 208

Jewelry Manufacturing GRT Deduction ................................................................................................ 209

Jicarilla Apache Tribal Capital Improvements Tax Credit against Oil and Gas Emergency School Tax . 209

Lease for Subsequent Lease GRT Deduction ........................................................................................ 210

Lease of Construction Equipment GRT Deduction ................................................................................ 210

Natural Gas Already Taxed Exemption from Natural Gas Processors Tax ........................................... 211

Natural Resources Subject to Resources Excise Tax Exemption from GRT........................................... 211

“Net Income” Exemptions from PIT ...................................................................................................... 211

Nonresident Exemption from Estate Tax .............................................................................................. 212

Occasional Sale of Property or Services Exemption from GRT ............................................................. 212

Oil and Gas or Mineral Interests Exemption from GRT ........................................................................ 212

One‐Way Haul and Empty Travel Rate Differential from WDT ............................................................. 213

Personal Effects Exemption from Compensating Tax ........................................................................... 213

Petroleum Products Exported for Resale Exemption from Petroleum Products Loading Fee ............. 213

Processors Tax Paid on Natural Resources Exemption from Resources Tax ........................................ 214

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Products Subject to Oil and Gas Emergency School Tax Exemption from GRT .................................... 214

Purchase for Resale Exemption from Local Liquor Excise Tax .............................................................. 215

Purchase of Undyed Gasoline for Certain Off‐Road Use Refund of Gasoline Tax ................................ 215

Purchases by or on Behalf of the State GRT Deduction ........................................................................ 215

Refiners and Persons Subject to Natural Gas Processors Tax Exemption from GRT and Compensating

Tax ......................................................................................................................................................... 216

Religious Activities Exemption from GRT .............................................................................................. 216

Resale Activities of an Armed Forces Instrumentality Exemption from GRT and Compensating Tax .. 217

Returned or Destroyed Tobacco Products Refund or Credit against Tobacco Products Tax ............... 217

Sale of a Service for Resale GRT and GGRT Deduction ......................................................................... 217

Sale of a Service for Resale Deduction from ITGRT .............................................................................. 218

Sale of Aerospace Services for the U.S. Air Force GRT Deduction ........................................................ 218

Sale of Gasoline at Retail by a Registered Indian Tribal Distributor Deduction from Gasoline Tax ..... 219

Sale of Gasoline by a Registered Indian Tribal Distributor from a Non‐Mobile Storage Container

Deduction from Gasoline Tax................................................................................................................ 220

Sale of Tangible Personal Property for Leasing GRT Deduction ........................................................... 220

Sale of Tangible Personal Property for Resale GRT AND GGRT Deduction........................................... 221

Sales Through World Wide Web Sites GRT Deduction ......................................................................... 221

Sales to Manufacturers GRT and GGRT Deduction ............................................................................... 222

School Bus Deduction from Special Fuel Excise Tax ............................................................................. 222

School Bus Exemption from WDT ......................................................................................................... 223

Services on Manufactured Products GRT Deduction ............................................................................ 223

Services Performed Outside the State Credit against ITGRT ................................................................ 223

Stock Bonus, Pension, and Profit‐Sharing Trusts Exemption from PIT and CIT .................................... 224

Tax Paid by Out‐of‐State Terminal Deduction from Gasoline Tax and Special Fuel Excise Tax ............ 224

Stadium Surcharge Exemption from GRT and GGRT ............................................................................ 225

Tax Paid in Another State for Property and Services Credit against GRT and Compensating Tax ....... 225

Tax Paid on Alcoholic Beverages Destroyed in Shipment, Spoiled, or Otherwise Damaged Refund of or

Credit against Liquor Excise Tax and Local Liquor Excise Tax ............................................................... 226

Tax Paid on Gasoline or Special Fuel Destroyed by Fire, Accident or Acts of God Before Retail Sale

Refund of or Credit against Gasoline Tax and Special Fuel Excise Tax ................................................. 226

Tax Paid on Special Fuel in Certain Circumstances Refund of Special Fuel Excise Tax ......................... 227

Tax Paid to Another State Credit against MVX ..................................................................................... 227

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Tax Paid to Another State Deduction from Gasoline Tax and Special Fuel Excise Tax ......................... 228

Tax Paid to Another State Credit against Estate Tax ............................................................................ 229

Tax Paid to Navajo Nation for Selling Coal Seventy‐Five Percent Credit against GRT .......................... 229

Tax Paid to New Mexico Tribes Exemption from ITGRT ....................................................................... 230

Tax Paid to New Mexico Tribes Seventy‐Five Percent Credit against GRT ........................................... 230

Taxes Paid to Other States Credit against PIT ....................................................................................... 231

Telecommunication Providers Deduction from ITGRT ......................................................................... 231

Trade‐In Allowance GRT, MVX, and Deductions ................................................................................... 232

Transactions in Interstate Commerce GRT and GGRT Deduction ........................................................ 232

Transactions in Intrastate Transportation and Services in Interstate Commerce GRT Deduction ....... 233

Transportation From Within the Municipality to Outside the Municipality Exemption from Local

Option GRT ............................................................................................................................................ 234

Uncollectible Debts GRT and GGRT Deduction ..................................................................................... 234

Unpaid Charges for Hospital Services Credit against GRT .................................................................... 235

Use of Tangible Personal Property for Leasing Deduction from Compensating Tax ............................ 235

Vegetable Oil or Animal Fat biodiesel Deduction from Special Fuel Excise Tax ................................... 235

Vehicle that is Owned by the State of New Mexico Exemption from MVX .......................................... 236

Vehicle that was Previously Registered in New Mexico Exemption from MVX ................................... 236

Vehicles Exemptions from GRT and Compensating Tax ....................................................................... 237

Vehicles Used for Short‐Term Leasing Credit against MVX .................................................................. 237

Vehicles Used in Interstate Commerce GRT Deduction ........................................................................ 238

Wages Exemption from GRT ................................................................................................................. 238

Warranty Obligations GRT Deduction ................................................................................................... 238

Arguable .................................................................................................................................................... 239

Administrative and Accounting Services GRT Deduction ..................................................................... 240

Agricultural Products Exemption from GRT and GGRT ......................................................................... 240

Certain Commissions GRT Deduction ................................................................................................... 241

Certain Sales for Resale Ten Percent Credit against GRT and GGRT .................................................... 241

Feed and Fertilizer & Auctioneers Selling Livestock and Agricultural Products at Auction GRT

Deduction .............................................................................................................................................. 242

Gross Amounts Wagered Exemption from GRT ................................................................................... 242

Insurance Companies Exemption from GRT ......................................................................................... 243

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Livestock Feeding Exemption from GRT ............................................................................................... 243

Petroleum Products Sold to the Federal Government Exemption from Petroleum Products Loading

Fee ......................................................................................................................................................... 243

Pipeline Transportation of Oil and Gas Products Exemption from GRT and Compensating Tax.......... 244

Processing Agricultural Products GRT Deduction ................................................................................. 244

Receipts of Homeowners Associations Exemption from GRT .............................................................. 244

Resale of Certain Manufactured Homes GRT Deduction ...................................................................... 245

Sale by or to U.S. Armed Forces Exemption from Liquor Excise Tax and Local Liquor Excise Tax ........ 245

Sale of Prosthetic Devices GRT and GGRT Deduction ........................................................................... 246

Sale or Lease of Real Property & Lease of Manufactured Homes GRT Deduction ............................... 246

Sales to Federal Government, State of New Mexico, or New Mexico Tribes Exemption from Cigarette

Tax and Tobacco Products Tax .............................................................................................................. 247

Sales to Governmental Agencies GRT and GGRT Deduction ................................................................ 247

Tax Paid on Special Fuel Used Credit against Special Fuel Excise Tax .................................................. 248

Travel Agents’ Commissions GRT Deduction ........................................................................................ 248

Use of Electricity Exemption from Compensating Tax .......................................................................... 248

Veterinary Medical for Treatment of Cattle GRT Deduction ................................................................ 249

Wide‐Area Telephone and Private Communications Service Deduction from ITGRT .......................... 249

Appendix A: Executive Order 2011‐071 ................................................................................................... 250

Appendix B: Table of Expenditures by Category ...................................................................................... 252

Appendix C: Frequently Used Acronyms .................................................................................................. 257

Appendix D: Principles of Good Tax Policy ............................................................................................... 258

Index of Statutes ....................................................................................................................................... 260

2016NewMexicoTaxExpenditureReport Page11

SECRETARY’SMESSAGE

TheTaxExpenditureReportisanexampleofgoodgovernment.In2011,NewMexicoGovernorSusanaMartinez’ExecutiveOrder2011‐071directedtheTaxationandRevenueDepartment(TRD),withassistancefromotherexecutivebranchagencies,toprepareanannualTaxExpenditureReport.Thereportservestwogoodgovernmentpurposes:(1)itcreatestransparencytothepublic,and(2)itcreatesaneffectivetoolforpolicymakerstomakebetterinformeddecisionsabouttaxincentives.

Sinceissuingthefirstreportin2012,TRDhasworkeddiligentlyeachyeartoimprovethequalityandscopeoftheTaxExpenditureReport.The2015TaxExpenditureReportreflectedseveralsignificantimprovements.Mostnotably,itpresentedanoverviewoftheState’sexpendituresbycategory,reflectedsignificantimprovementsintheaccuracyofexpenditureamounts(especiallywithrespecttopersonalandcorporateincometaxdeductions)andprovidedamorerobustanalysisofmanyexpenditures.The2016reportcontinuestheseeffortstoinclude:expandingtheevaluationofmanyoftheexpenditures,addingamoredetailedexplanationofhowtheaverageGRTrateisusedtocalculatetherevenuelossofGRTdeductions,addingasectiontoeachexpendituretoshowwhichofthefivecategoriestheexpenditureisin,andincludingdataforsomeexpendituresthathadnodatain2015.Thisyear,andbasedonfurtherreviewandanalysis,severalstatutoryprovisionswereremovedfromthereport:theyarenottaxexpendituresbutratherdefinethetaxbaseorconstitutethebaselinesystemoftaxationforspecificactivities.Theseprovisionsinclude,forexample,theseverancetaxratedifferentialsforMolybdenum,PotashandTimber.

Theimprovementsofthelasttwoiterationsofthereportshouldbecreditedtotheleadership,directionandhardworkoftheTaxPolicyDirectorandstaff,whohavefocusedondatacollectionandotherprocessimprovementsthatwillcontinuetoyieldanincrementallybetterreporteachyear.Moreover,TRDisfortunatetohaveateamoftalentedeconomists,whohavededicatedanuntoldnumberofhourscombingthroughthestatutes,collectingandcollatingdata,andanalyzingtheimpactsofthedeviationsfromtheNewMexicotaxprograms.Thenotedgroupinclude:ChiefEconomistElisaWalker‐Moran,HectorDorbecker,JamesGirard,JamesKaminskyandLucindaSydow.Anundertakingofthismagnitudewouldnotbepossiblewithoutthem.NorwoulditbepossiblewithoutthecooperationofthemanyexecutivebranchagencieswhoplayaroleinadministeringmanyofthetaxcreditsNewMexicousestoincentivizebeneficialeconomicactivity.Weremaingratefulfortheirassistance.

ActingSecretaryJohnMonforteTaxationandRevenueDepartmentStateofNewMexico


BRIEFSUMMARYOFNEWMEXICO’SMAJORTAXES

PERSONALINCOMETAXBecauseitisbasedonafederaltaxprogram,NewMexico’spersonalincometax(“PIT”)1isrelativelysimpleforthetaxpayertocomplywithandfortheStatetoadminister.

ThePITratesforTaxYears2008through20162are:

MarriedFilingSeparately

HeadofHousehold,SurvivingSpouses,andMarriedFiling

JointlyIndividuals,Estates,

andTrusts Rate

Upto$4,000 Upto$8,000 Upto$5,500 1.7%Over$4,000to$8,000 Over$8,000to$16,000 Over$5,500to$11,000 3.2%Over$8,000to$12,000 Over$16,000to$24,000 Over$11,000to$16,000 4.7%Over$12,000 Over$24,000 Over$16,000 4.9%

PITalsosharesmanybasedefinitionissueswiththefederalincometaxprogram.Forexample,NewMexicofollowsthefederalpracticeofallowingtheexclusionofacertainamountofincomefromtaxationthroughthepersonalexemptionandthestandarddeduction.Notethat,becausethesepoliciesarecommonpracticeamongthestatesandbecausetheyarepartandparcelofdefiningtheNewMexicotaxbase,theyarenottreatedastaxexpendituresinthisreport.Similarly,therearenumeroustaxexpendituresunderfederaltaxlawonwhichtheState“piggybacks”becauseNewMexicotaxableincomeisbasedonfederaladjustedgrossincome.Becausesuchpiggybackingisacommonpracticeamongmoststates,thestatetaxeffectsofthesefederaltaxexpendituresarenotreportedastaxexpendituresinthisreport.

CORPORATEINCOMETAXNewMexico’scorporateincometax(“CIT”)isalsobasedonthefederalcorporateincometaxwiththesamecorrespondingadministrativebenefitsfortaxpayersandtheStateinitsadministration.

Section7‐2A‐2(C)NMSA1978defines"baseincome"asthatpartofthetaxpayer'staxableincomeuponwhichthefederalincometaxiscalculated,excludingtheamountofthenetoperatinglosscarryoverdeductionandincludinginterestreceivedonstateorlocalbonds3.Thestatutethendefines“netincome”asbaseincomeadjustedbyexclusionsofincomefromtheobligationsofthefederalgovernment,otherincomewheretaxisprohibitedbyexplicitstatutoryorconstitutionalauthority,andstatutoryprovisionsfornetoperatinglosscarryoverdeductions4.

Thus,“netincome”isdefinedasthetaxbaseforCITpurposesinNewMexico,and,byapplicationoftheincome‐graduatedpercentagetaxrate,“baselinetaxrevenue”isdefined.

1Forreference,alistofcommonlyusedacronymsisprovidedinAppendixC.2PITandCITdatafromtaxyear2014isthemostcompletedatasetavailableatthetimeofpublicationofthisreport.ThecurrentPITrateshavebeenineffectsince2008.3Section7‐2A‐2(C)NMSA19784Section7‐2A‐2(H)NMSA1978


ThefollowingtableshowstheCITratesfrom1987throughfullimplementationofHB641(2013)in2018:

1987‐2013 2014 2015 2016 2017 2018Upto$500,000 4.8% 4.8% 4.8% 4.8% 4.8% 4.8%$500,000.01to$1,000,000 6.4% 6.4% 6.4% 6.4% 6.2% 5.9%Over$1,000,000 7.6% 7.3% 6.9% 6.6% The2013LegislativeSessionproducedtwoadditionalCITchanges,includingmandatorycombinedreportingforcertainretailersandsingle‐salesfactorapportionmentelectionformanufacturers.The2015LegislativeSessionaddedthesingle‐salesfactorapportionmentelectionforheadquarters.

GROSSRECEIPTSTAXInNewMexico,astatetaxof5.125%andlocaloptiontaxesareimposedongrossreceiptsreceivedfromcertaintransactions.“Grossreceipts”isthetotalamountofmoneyorotherconsiderationgenerated“fromsellingpropertyinNewMexico,fromleasingorlicensingpropertyemployedinNewMexico,fromgrantingarighttouseafranchiseemployedinNewMexico,fromsellingservicesperformedoutsideofNewMexico,theproductofwhichisinitiallyusedinNewMexico,orfromperformingservicesinNewMexico”5.Thisisafarmorecomprehensivetaxbasethanthetypicalretailsalestaximposedbymoststates.Itisalsomorecomprehensivethanavalueaddedtaxbase,acommonlysuggestedalternativeforconsumptiontaxation.Becauseofthisbroadbasedefinition,manyoftheexemptionsanddeductionsintheGRTprogramarenecessarytopreventmultipletaxationoftransactionsandtheassociatedeconomicdistortionthatwouldcause.Examplesincludetheexemptionforwages,dividends,andinterest,allofwhicharetaxedundertheincometax.Alsoexemptarevarioustransactionswhicharetaxedunderseparateexcisetaxes,includingmotorfuels,motorvehicles,etc.

AnothersetofdeductionsandexemptionsintheGRTprogramisdesignedtoreducetheincidenceof“taxpyramiding.”Taxpyramidingreferstotheimpositionoftaxonbusinesspurchases.BecausethefinalsalesbybusinessesaretypicallysubjecttoGRT,imposingtheGRTontheirpurchasescreatesanadditionallayeroftaxation.Thispracticecreateseconomicdistortionbecause,forexample,smallbusinesseshavetopurchasemoreofthegoodsandservicestheyneedfromoutsidecompaniesthandolargebusinesses;theGRTonthoseinputscreatesadiscriminatoryburdenonthem.Deductions,likethedeductionforthesaleofgoodsforre‐sale,reducethisburdenandensurethatthetaxpolicyprinciplesofHorizontalEquityandEfficiencyaremet.Therefore,theyarenottreatedastaxexpenditures.

Whilenotdirectlyrelatedtodeterminingwhetheraparticularexemption,deduction,orcreditisataxexpenditure,thequestionaboutthemunicipalshareoftheGRTcomesupquitefrequentlybecauseitplaysaroleaboutthefiscalimpactoftaxexpenditures.PursuanttoSection7‐1‐6.4NMSA1978,theStategiveseachmunicipalityapproximately24%(1.225%dividedby5.125%)oftheGRTrevenuefromtheStateratethatisgeneratedfromactivitytakingplaceinthatmunicipality.Tothinkofitanotherway:fortaxableactivitytakingplacewithinamunicipality,theState’seffectiveratebecomes3.9%whiletheeffectiverateforeachmunicipalityisincreasedby1.225%.

5Section7‐9‐3.5(A)(1)NMSA1978


COMPENSATINGTAXInNewMexico,acompensatingtaxisimposedatarateof5.125%ontheuseoftangiblepropertyand5%oncertainservicesusedinNewMexico.ThistaxisNewMexico’sversionofa“use”tax.UnliketheGRT,thelegalincidentofthecompensatingtaxisonthepurchaser,butthecollectionobligationforthecompensatingtaxmaytransfertothesellerifthesellerisnotsubjecttoGRTandcanberequiredtofulfillthiscollectionobligationundertheU.S.Constitution.TypicallythecompensatingtaxisimposedonNewMexicobusinesseswhentheypurchasefromout‐of‐statevendors.BecauseoftheunusualnatureoftheGRT,manyofthedeductionsfromthecompensatingtaxbasecanbethoughtofassimplydefiningthetaxbase.

OTHEREXCISETAXESAsisthecasewiththeGRTandthecompensatingtax,NewMexico’sexcisetaxescontainseveralprovisionswhichservetodefinethetaxbasebypreventingdoubletaxationortaxpyramiding.Examplesincludetheexemptionforsalesofcigarettesontriballandstotribalmembers.Otherprovisionsaretreatedastaxexpendituresinthisreport,includingthesaleofcigarettesbytribalvendorstonon‐tribalmembers.

NATURALRESOURCEEXTRACTIONTAXESNewMexicoimposesavarietyoftaxesonnaturalresourceproductionactivities.Thesetaxesaregenerallyimposedontheprivilegeofseveringnaturalresourcesandthelargestofthedeductionsassociatedwiththesetaxesreducetaxablevalueforroyaltiespaidtofederal,Indian,andstateownersoftheminerals.BecausetheStateispreemptedfromimposingtaxontheseentities—orbecauseitwouldn’tmakesensefortheStatetotaxitself—thesearenottreatedastaxexpenditures.MostoftheremainingdeductionsallowedunderNewMexico’smineralsproductiontaxes,suchasprocessingandtransportationdeductions,servetodefinethetaxbasebecausetaxablevaluefortheseveredproductsisdeterminedattheextractionlocation.Becausetheactualsalesofseveredmaterialsoftenoccursafterthematerialshavebeentransportedfromtheextractionsiteandprocessedtosomedegree,thesedeductionsarenecessarytodeterminethevalueoftheproductthatformsthestatutorytaxbase.Otherprovisions,aimedatstimulatingparticulartypesofproduction,forexample,aretreatedastaxexpenditures.

ThedropinoilpricesandcontinuedlownaturalgaspriceshasledtolowerseverancetaxrevenuesforNewMexicoinFY15andFY16.Thetaxexpendituresforoilandgaslistedinthisreportincentivizecontinuedproductionwhenpricesdropbelowspecificthresholds.However,despitethelowprices,severancetaxexpendituresforoilandgasremainatzeroandproductionwasnotincentivizedbecausepricesremainedabovethethresholdsspecified.

PROPERTYTAXNewMexico’spropertytaxlawfeaturesanumberoflimitationsandexclusionsthatreducetherevenue‐generatingpotentialofthetax.Someofthesearebroad‐based,however,andarenottreatedastaxexpendituresinthisReport.Examplesincludetheexclusionfromtaxofpersonalpropertyandthe3%limitonannualvaluegrowthforresidentialproperty.Otherprovisionsthataretargetedatspecificpopulationsareincluded.Notethatbecausemostpropertytaxesareassessedandcollectedatthecountylevel,TRDdoesnotmaintaindatathataddressestheimpactofpropertytaxexpenditures.


PERSONALINCOMETAXBYINCOMEBRACKETTABLE

AllTaxPayers(TaxYear2014Data)

IncomeBracketNumberofReturns

PercentReturns

NewMexicoTaxableIncomebyBracket

PercentNMTaxableIncome

EstimatedTaxonTIinBracket

PercentTax

Under$25,000 628,635 62.28% 2,616,698,286 2.76% 67,773,915 5.34%

$25,000‐$50,000 145,020 14.37% 5,308,344,213 5.61% 190,048,885 14.99%

$50,000‐$75,000 88,052 8.72% 5,407,146,932 5.71% 203,833,160 16.08%

$75,000‐$100,000 49,627 4.92% 4,279,208,068 4.52% 161,410,063 12.73%

$100,000‐$200,000 61,892 6.13% 8,365,758,766 8.84% 295,000,173 23.26%

Over$200,001 36,119 3.58% 68,691,347,610 72.56% 349,937,789 27.60%

Total 1,009,345 100.00% 94,668,503,875 100.00% 1,268,003,985 100.00%

SingleFilers

Under$25,000 343,260 73.84% 1,522,205,703 8.81% 41,923,801 12.81%

$25,000‐$50,000 67,939 14.62% 2,431,247,048 14.07% 90,996,897 27.80%

$50,000‐$75,000 27,685 5.96% 1,677,658,581 9.71% 64,740,557 19.78%

$75,000‐$100,000 10,871 2.34% 931,597,491 5.39% 35,017,938 10.70%

$100,000‐$200,000 9,899 2.13% 1,316,398,232 7.62% 43,941,182 13.42%

Over$200,001 5,204 1.12% 9,403,892,598 54.41% 50,748,339 15.50%

Total 464,858 100.00% 17,282,999,653 100.00% 327,368,714 100.00%

HeadofHouseholdFilers

Under$25,000 135,606 83.05% $435,881,216 15.80% $10,173,070 14.57%

$25,000‐$50,000 16,392 10.04% $592,957,221 21.50% $20,902,681 29.93%

$50,000‐$75,000 6,394 3.92% $385,814,033 13.99% $14,820,224 21.22%

$75,000‐$100,000 2,194 1.34% $187,555,820 6.80% $7,380,962 10.57%

$100,000‐$200,000 1,846 1.13% $243,123,310 8.81% $8,700,241 12.46%

Over$200,001 848 0.52% $913,051,470 33.10% $7,852,829 11.25%

Total 163,280 100.00% 2,758,383,070 100.00% 69,830,007 100.00%

JointandSurvivingSpouse

Under$25,000 143,959 38.86% $617,210,830 0.89% $14,352,748 1.68%

$25,000‐$50,000 58,288 15.73% $2,197,815,584 3.17% $74,766,619 8.74%

$50,000‐$75,000 52,954 14.29% $3,282,056,654 4.74% $121,894,781 14.25%

$75,000‐$100,000 36,118 9.75% $3,121,892,246 4.51% $117,646,492 13.75%

$100,000‐$200,000 49,701 13.42% $6,745,988,853 9.74% $240,620,026 28.12%

Over$200,001 29,431 7.94% $53,317,953,184 76.96% $286,371,573 33.47%

Total 370,451 100.00% 69,282,917,351 100.00% 855,652,238 100.00%

SeparateFilers

Under$25,000 5,810 54.02% $41,400,537 0.77% $1,324,296 8.74%

$25,000‐$50,000 2,401 22.32% $86,324,360 1.62% $3,382,688 22.32%

$50,000‐$75,000 1,019 9.47% $61,617,664 1.15% $2,377,598 15.69%

$75,000‐$100,000 444 4.13% $38,162,511 0.71% $1,364,671 9.01%

$100,000‐$200,000 446 4.15% $60,248,371 1.13% $1,738,724 11.47%

Over$200,001 636 5.91% $5,056,450,358 94.62% $4,965,048 32.77%

Total 10,756 100.00% 5,344,203,801 100.00% 15,153,025 100.00%


CORPORATEINCOMETAXBYINCOMEBRACKETTABLE

2digitNAICS

2014IndustriesTaxableIncomeover

$1,000,000

TaxableIncomeover$500,000butnotover

$1,000,000

TaxableIncomeunder$500,000

CIT #Returns CIT #Returns CIT#

Returns

11Agriculture,Fishery

andHunting$75,202 <4 $175,787 4 $489,289 181

21OilandGasandOther

Mining$36,123,275 40 $1,024,313 22 $987,160 314

22 Utilities $91,614 <4 $63,536 <4 $45,696 17

23 Construction $1,083,407 8 $492,884 13 $1,035,834 457

31‐33 Manufacturing $94,955,722 61 $1,724,410 34 $2,936,708 665

42 WholesaleTrade $4,905,884 23 $1,307,930 26 $2,441,606 591

44‐45 RetailTrade $18,079,502 42 $1,339,419 26 $2,020,825 467

48‐49Transportation&Warehousing

$21,385,483 14 $372,144 7 $744,181 255

51 Information $5,992,954 18 $39,527 <4 $746,549 205

52 Finance&Insurance $17,722,467 47 $1,032,010 23 $1,630,738 610

53RealEstate&Rental&

Leasing$2,010,954 10 $80,881 <4 $1,109,234 528

54Professional,

Scientific&Technical$6,274,030 21 $926,100 19 $2,158,884 885

55ManagementofCompanies&Enterprises

$40,097,788 42 $801,355 14 $1,415,177 270

56Admin&Support&

WasteMgtRemediation

$1,921,963 4 $209,909 4 $577,248 271

61 EducationalServices $471,851 <4 $0 0 $130,169 41

62HealthCare&Social

Assistance$1,487,880 8 $386,159 7 $440,516 175

71Arts,Entertainment,

&Recreation$110,863 <4 $136,002 <4 $111,086 61

72Accommodation&FoodService

$634,908 5 $211,100 4 $550,184 157

81OtherServicesexceptPublicAdministration $221,004 <4 $123,602 <4 $332,188 205

Note:OnlybusinessesthatreportedavalidNAICScodesareincludedinthechartabove.


GROSSRECEIPTSTAXAVERAGERATETABLE

TRDutilizestheconceptofanaverageactualgrossreceiptstaxratewhenestimatingthecostofataxexpenditureasmeasuredintermsofgrossreceiptstaxforgone.InordertoobtaintheaverageactualgrossreceiptsinFY16of6.9273%,thegrosstaxamountasreportedthroughtheRP‐500monthlyreportforallindustrieswithinallcitiesandcounties,isdividedbytheamountoftaxablegrossreceiptsasreportedforthegeneralfund.TheRP‐500isamonthlylocalgovernmentdistributionreportthatprovidesthedetailbehindthedistributionsmadetoeachmunicipalityorcountyforthemonthinwhichthebusinessactivitytookplace.TheRP‐500reportbreaksdownthedistributionsintoeitherthecurrentactivitymonthorallothermonths,whichcanbefromlatereportingoramendments.Asanexample,ifTaxpayerAamendsreturnsforsixmonthsinthereportingmonthofSeptemberitwillaffectthedistributionmadeinOctoberandwouldbereportedunder“OtherMonths”inthereport.TheresultisthattheRP‐500isnotupdatedwiththeeffectsoftaxpayeramendmentsonolderreturns.Instead,theyareaggregatedintothe“OtherMonths”category.

Alternatively,theRP‐80reportforagivenactivitymonthisupdatedwiththeeffectsoftaxpayeramendments.Thisreportprovidesgrossreceiptsinformationbygeographicareaand6‐digitNAICScodesandshowsasinglemonth’sactivityascurrentlyrecordedinGenTax.Basedontheexampleabove,theamendmentsthatTaxpayerAsubmittedwillshowupintheiractualactivitymonths.NormallyTRDupdatestheRP‐80simultaneouslywiththeRP‐500.Thiswayeachlocationthatreceivesadistributionhasthecurrentactivityforthedistributionmonth.Forthereasonsexplainedabove,theRP‐80cannotbedirectlycomparedtotheRP‐500.

BelowaretwoGrossReceiptsTaxAverageRateTablesthatprovideexamplesofhowtheRP‐500andRP‐80differ.

RP‐500Report

GrossReceipts

TaxableGrossReceipts

GrossTax

Food&Medical

Deductions

AverageStateRate

Formula:A‐B

Formula:F*E

$Millions A B C D E=(C/B) F GFY2011 $98,539 $46,917 $3,226 $4,036 6.875% $51,622 $3,549FY2012 $100,236 $48,796 $3,379 $4,250 6.924% $51,440 $3,562FY2013 $102,260 $50,053 $3,425 $4,307 6.843% $52,207 $3,573FY2014 $104,023 $51,523 $3,517 $4,344 6.827% $52,500 $3,584FY2015 $106,409 $55,506 $3,762 $4,284 6.777% $50,903 $3,450FY2016 $103,929 $52,238 $3,619 $4,917 6.927% $51,690 $3,581

Source:RP‐500.Fiscalyearsrepresentdistributions.

RP‐80ReportGrossReceipts

TaxableGrossReceipts

GrossTax

Food&Medical

Deductions

AverageStateRate

Formula:A‐B

Formula:F*E

$Millions A B C D E=(C/B) F GFY2011 $103,786 $47,825 $3,283 $4,115 6.864% $55,961 $3,841FY2012 $105,298 $49,546 $3,391 $4,316 6.843% $55,752 $3,815FY2013 $107,631 $50,576 $3,465 $4,352 6.851% $57,055 $3,909FY2014 $109,294 $52,313 $3,570 $4,410 6.825% $56,981 $3,889FY2015 $109,994 $55,179 $3,792 $4,259 6.873% $54,816 $3,767FY2016 $107,507 $51,755 $3,664 $4,872 7.079% $55,753 $3,947

Source:RP‐80.Fiscalyearsrepresentbusinessactivity.


TAXEXPENDITURES

Anydiscussionoftaxexpendituresnecessarilybeginswithadefinitionoftheterm.Thefederalgovernmentdefinestaxexpendituresas“thoserevenuelossesattributabletoprovisionsoftheFederaltaxlawswhichallowaspecialexclusion,exemption,ordeductionfromgrossincomeorwhichprovideaspecialcredit,apreferentialrateoftax,oradeferraloftaxliability….”6Inprevioustaxexpenditurereports,wedefinethemas“deviationsfromabaselinetaxsystemcreatedbyspecifictaxlawprovisions.”7Taxexpendituresmayreflectanoverarchingstatewidepolicy,suchastopromotethegeneralwelfareofallcitizens,ormayreflectaspecificpurpose,suchastoincentivizeacertaintypeofconsumerbehavior,economicdevelopment,orjobcreation.Putsimply,taxexpendituresmaybethoughtofasspendingthroughthetaxcode.

Withthatdefinitioninmind,noteverycredit,exemption,deduction,orratedifferentialconstitutesataxexpenditure.Certaincredits,exemptionsanddeductionsarenotconsideredtaxexpendituresdueto:(1)constitutionalprohibition(2)Federalpre‐emption;(3)comitybetweengovernments;and(4)taxbase‐defining.Taxbase‐definingisparticularlyimportantgiventhatNewMexicohasaGRTwhichappliesmorebroadlythanatraditionalsalestax.Intheory,becausetheGRTis“imposedonanypersonengaginginbusinessinNewMexico”8and“engaginginbusiness”isdefinedas“carryingonorcausingtobecarriedonanyactivitywiththepurposeofdirectorindirectbenefit…”9,weretherenoexemptions,deductions,orcredits,virtuallyalleconomicactivityinNewMexico–includingreceiptsintheformofwages–wouldbesubjecttothistax.

Thequestionsare:dodifferenttaxstructuresconstitute“taxexpenditures”?Ifso,whatisthebaselinefromwhichtheyaredeviating?

Thesequestionsarenoteasilyansweredbecausemosttaxingjurisdictionstaxdifferentactivitiesindifferentwaysandfordifferentdesiredoutcomes.Exemptions,deductions,credits,orratedifferentialsforactivitiesinonetaxprogramcategorizedastaxexpendituresarenottreatedastaxexpendituresifthepolicymakersinNewMexicohavedecidedtousedifferenttaxstructurestotaxdifferentactivities(e.g.personalincometaxes,corporateincometaxes,motorvehicleexcisetaxes,andseverancetaxes,tonameafew)..Likewise,ifataxstructuretaxesdifferentactivitiesorproductsdifferentlywithoutestablishingabasetaxrate,wedonottreattheseratedifferentialsastaxexpenditures.If,however,ataxstructurehasabasetaxrateandthereareinstancesinwhichanactivityorproductistaxedatadifferentrate,wetreattheseastaxexpenditures.Werecognizethat,tosomedegree,thisisanacademicdifference,butwearenotinapositiontosubstituteourjudgmentforthatoftheLegislatureandGovernorbyattemptingtodeterminewhattaxrateshouldserveasthebaserateandwhichtaxratesshouldthenbeviewedasdeviationsfromthatbaserate.

Reasonablemindswithasharedunderstandingofthesedefinitionsmaydisagreeonspecifictaxexpenditureexamples.However,therearegenerallyacceptedstandardsformostdeviations,andweconfidentlyincludethemintheTaxExpendituressectionofthisreport.Similarly,weconformtogenerallyacceptedstandardsforexamplesofdeviationsthatarenottaxexpendituresinthatsection.Finally,wecreatedasectionwhereconsensusislacking.Thissectionisprovidedtoensuretransparencyandconsistencyinreporting.WithExecutiveOrder2011‐071inmind,we62USC§62272013TaxExpenditureReport8Section7‐9‐4NMSA19789Section7‐9‐3.3NMSA1978


includethestatutorybasis,theintendedpurpose,anevaluation,anyrecommendations,andthefiscalimpactorestimatedfiscalimpactforeachtaxexpenditure.Inanefforttomakethedatamorereadable,andhopefullymoreuseful,weincludechartsandhistoricaltablesofthefiscalimpact.

WhilenotmandatedbytheExecutiveOrder,wealsoincludebothareliabilityfactor,andabriefhistoryofeachstatute,tohelpthereaderunderstandhowthestatutehasevolved,aswellasasummaryoftheprovisionasitexistsatthepresenttime.Wealsoaddedasectiontoeachexpendituretoshowwhichofthefivecategories(citizenbenefit,economicdevelopment,etc.)theexpenditureisin.Manysectionshavebeenamendedseveraltimesandwenotetheyearofeachamendment.Foramendmentsthathaveadirectimpactonthedeviationbeingdiscussed,wesummarizethesubstanceofthechange.

Intotal,thereare123taxexpenditures,98provisionsthatarenottaxexpenditures,and23activitieswhereconsensusislacking.


NOTESABOUTTYPESOFTAXEXPENDITURES

EXEMPTIONSANDDEDUCTIONSIntermsofthepracticaleffectontaxliability,thereislittledifferencebetweenan“exemption”anda“deduction.”However,thereareconceptualdifferencesandsignificantadministrativedifferencesbetweenexemptionsanddeductions.Ataconceptualordefinitionallevel,an“exemption”isastatutorymeansoffreeingataxpayerfromaduty,liability,orrequirement.NewMexicotaxexemptionscomeinseveralforms.Therecanbeabroadexemptionforcertaintypesoftaxpayersfromataxprogram—insurancecompaniesareexemptfromcorporateincometaxiftheypayNewMexicopremiumtaxes.Therecanbeexemptionsforcertaintypesoftransactions;and,therecanbeexemptionsforcertainamountsofincome,revenue,orgrossreceipts.Inmostinstances,exemptionsfreetaxpayersofareportingobligationwithrespecttotheexemptentity,transactions,oramounts.Inshort,unlessspecificallyrequiredbystatuteorinstruction,exemptionsarenotreported.

Ataxdeductionisastatutorymechanismthatdecreasesataxpayer’sliabilitybyreducingtheamountofthetaxpayer’sincome,revenue,orgrossreceiptsthatissubjecttotax.Likeexemptions,deductionscanapplytocertaintypesofentities,totransactions,ortoamountsofincome,revenue,orgrossreceipts.Unlikeexemptions,deductionsdonottypicallyfreetaxpayersofreportingobligations.Rather,taxpayersthatareentitledtodeductionstypicallymustfilereturnsundertheparticulartaxprogramtowhichthedeductionpertains,identifytheamountofthetaxbasebeforethededuction,andthenreducethistaxbasebytheamountofthededuction.Inaddition,manydeductionsundertheGRTprogramrequirethetaxpayertoobtainnontaxabletransactioncertificatestoestablishentitlementtothededuction.

Asnotedabove,manydeductionsandexemptionsinNewMexicostatutesarenottaxexpenditures.

CREDITSAtaxcreditisastatutorymechanismwhichallowstaxpayersthatmeetthequalificationsforobtainingacredittosubtracttheamountofthecreditfromthetotaltaxliabilitytheyowetheState.Taxcreditscanbegrantedinrecognitionoftaxesalreadypaidortoencouragebehaviorslikeinvestmentorparenting.Mosttaxcreditsarereportedonreturns,butarenotalwaysseparatelyreported.

DIFFERENCEBETWEENTAXCREDITSANDDEDUCTIONSTaxdeductionsandtaxcreditscanbothreduceataxpayer’staxliability,buttheydoitindifferentways.Taxdeductionsreducethetaxpayer’staxbase,forexampletaxableincomeforincometaxesorgrossreceiptsforGRT,inordertocalculatethetaxpayer’sliability.Additionally,deductionscannotreducetaxableincomebelowzero.Incontrast,taxcreditsdonotdirectlyreduceaperson’staxbase.Rather,theyaredollarfordollarcreditamountsthatoffsetorreduceataxpayer’sliability.Incontrasttodeductions,creditsthatexceedliabilityareoftenallowedtobecarriedforwardtothetaxpayer’snextreportingperiod,or,inmorelimitedinstances,arerefundable.


NOTESABOUTTHEDATA

Aswiththe2015TaxExpenditureReport,thisreportcontinuestoqualifytheexpenditureamountswithReliabilityFactors,whichareanefforttohelpthereaderunderstandthemethodologyfordeterminingthefiscalimpactofthetaxexpenditure.Westressthatthefiscalimpactofanexpenditureneedstobereadinconjunctionwiththatexpenditure’sreliabilityfactor.TheReliabilityFactorisascaleof1‐4asfollows:

1: Themostreliableinformationcomesdirectlyfromtaxpayer‐reporteddata,ascontainedinGenTax.Itrequiresnoadditionalestimationormanipulationwithoneexception;instanceswheretheGRTactualaveragerateisusedtoestimatetheforgonetaxinsteadofusingtheknownratesinthedifferentjurisdictionsinthestate.Thisdata,however,isonlyasreliableasthetaxpayerswhoarereportingit.

2: Estimatedfromtaxpayer‐reporteddataascontainedinGenTax(RP‐80report).Forexample,ifaGRTtaxexpenditureisindustry‐specific,weareabletomakeassumptionsbasedonNorthAmericanIndustryClassificationSystem(“NAICS”)codes.

3: EstimatedusingnationaldataandextrapolatingtoNewMexico.4: Theleastreliabledata.Estimatesrepresenttheeconomists’bestestimateaboutthe

valueofataxexpenditure.Duetolimiteddataforanalysis,theseestimatesarefrequentlyroundeduptothenearestmillion.

Inaddition,alimitednumberofexpenditureshaveunknownreliability,becausethereisnodataavailabletomakeevenanestimateoftheamount.ThisisreflectedinthetablebelowshowingthenumberofexpendituresforeachReliabilityFactor.

ReliabilityFactor Description NumberofExpenditures1 Mostreliable.Noestimation 682 EstimatedfromGenTaxdata 163 Estimatedfromnationaldata 154 Leastreliable.Estimatedfrom

limiteddata8

Unknown Nodataavailable 16

Readersshouldunderstandthattaxpayershavetheopportunitytoamendtheirtaxreturnsforuptothreeyears,plusthecurrentyear.Amendedreturnsoftenimpactexpenditureamounts.Wedecidedthatcurrentdataismorevaluablethanhistorically‐consistentdata.Therefore,whencomparingthisyear’sTaxExpenditureReporttopriorversions,thereadershouldexpecttoseesomechangestoprioryears.Forexample,theamountofaparticularexpenditureforFY2013maybedifferentinthe2016TaxExpenditureReportthanitwasinthe2015TaxExpenditureReport.Amendedreturnscompriseasignificant,butnotthesolereason,forthesevariations.OthersourcesofthevariationmayincludelatefilingsbytaxpayersorimprovementstoTRDmethodologiesforquantifyingcertainexpenditures.

NewMexico,likemanystates,definesayeardifferentlyfordifferenttaxstructures.Forinstance,theGRTtaxyearcorrespondstotheState’sfiscalyear(July1‐June30)whiletheincometax


programsuseacalendaryear(January1‐December31).Thispresentsachallengefororganizingandreportingthedata.BecausethetaxfilingdeadlineforpersonalincometaxisinAprilofthefollowingyearandthemoneyaccompanyingthosereturnsgoestotheGeneralFundduringthefollowingfiscalyear,wepresentthetaxyeardataasfiscalyear(i.e.,PITyear2014ispresentedasFY2015becausePITyear2014returnsaredueinAprilof2015whichisinthe4thquarterofFY2015).PITandCITdatafromtaxyear2014isthemostcompletedatasetavailableatthetimeofpublicationofthisreport.

Finally,ourgoalistoprovidedataforeachtaxprogramaffectedbyataxexpenditure.However,wearelimitedbothbyfederalandstatelawfromdisclosingdatawhichmightrevealataxpayer’sidentity.Therefore,whentherearelessthanthreetaxpayersreportingadeduction,exemption,orcreditagainstaparticulartax,wecombinedthedataforallofthetaxprogramsaffectedbythosedeductions,exemptions,andcredits.Whencombiningthedataisnotenough,weredactedit.Further,asavisualcuethroughoutthisdocument,thereaderwillfindanumberofblankentriesintableswherethedataareredacted.


CATEGORIZINGEXPENDITURES

FollowingTRD’spresentationofthe2015TaxExpenditureReporttointerimLegislativecommittees,TRDcategorizedtheexpendituresreportedinthis2016TaxExpenditureReportintothefollowingfivemajorcategories:citizenbenefits;economicdevelopment;environment,conservation,andrenewableenergy;healthcare;and,highlyspecializedindustryincentives.PleasenotethatthegroupingofexpendituresintocategoriesisnotanindicationofwhetherTRDbelievesanyparticularexpenditureorcategoryofexpendituresisgoodorbad,asamatterofpolicy.Rather,categorizingexpendituresaffordspolicymakersabroaderviewofNewMexico’staxexpendituresthatcannotbegleanedfromreviewingeachindividualexpenditureinisolation.

Aswiththedeterminationofwhetheraparticulardeduction,credit,orexemptionconstitutesataxexpenditure,TRDacknowledgestherethatcanbelegitimatedifferencesofopinionastowhetheraparticularexpenditurebelongsinonecategoryoranother.Certainexpendituresmaycrossmultiplecategories.Forexample,anexpenditurelistedinthehighlyspecializedindustrycategorymightalsoserveeconomicdevelopmentpurposes.However,TRDbelievesitisimportanttotheintegrityofthecategorizationexercisetoincludeeachexpenditureinonlyonecategory.Finally,asTRDcontinuestodevelopitscapacitytechnologically,expenditurecategoriesmaychange.Forexample,wemayhavethecapabilityinfuturetaxexpenditurereportstogroupexpendituresthatpertaintoaspecificindustryoraspecificsubsetoftaxpayersintosmallercategoriesinordertoexaminetheuniverseofexpendituresthataffectorcouldaffectcertaingroupsorindustries.

Theoutlinebelowsetsforthexpendituresincludedineachcategory.ThefulllistcanbefoundinAppendixB.

1. CitizenBenefitsa. Expendituresthatareavailabletoorthatbenefitallindividualtaxpayers,suchasthe

expendituresforfood&medicalservicesandprescriptiondrugdeductionsfromGRTandcontributionstotheeducationdeductionfromPIT.

b. Expendituresdesignedtoalleviateburdensforaspecificsubsetofthepopulation,suchasveterans,activemilitary,low‐income,ortheelderly.

c. Expendituresthatlessentheburdensofgovernment,suchascertainnonprofitexpenditures.

2. EconomicDevelopmenta. ExpendituresdesignedtostimulateinvestmentinNewMexico,suchastheangel

investmentPITcredit.b. Jobcreationexpenditures,suchasthehigh‐wageandruraljobtaxcredits.c. Expendituresdesignedtoattractindustries,suchasthefilmproductionandR&Dcredits.

3. Environment,Conservation,andRenewableenergy

a. Expendituresdesignedforenvironmentalhealth,topromoteconservation,andtopromoterenewableenergytechnologiesandusage,suchastheadvancedenergycredit(renewablesandcarbonsequestration),biofuelsincentives,renewableenergyproductiontaxcredit,andPIT/CITcreditforlandconservationcontributions.


4. HealthCareExpendituresdesignedtoincreaseaccessibilitytoandlowerthecostsofhealthcare.ExamplesincludethehealthcarepractitionersGRTdeduction,hospitalconstructiondeduction,andruralhealthcarepractitionersPITcredit.

5. HighlySpecializedIndustriesExpendituresavailabletospecificorhighlyspecifiedindustries,suchasagriculture,uranium,aerospace,andotherindustries.

Thechartbelowreflectsthemostrecentdataavailableforalltaxexpenditures.Thedatapresentedisbasedontheun‐redactedcostofthetaxexpenditures.

50%

18%

3%

21%

8%

CitizenBenefits

EconomicDevelopmentIncentive

Environment,Conservation&RenewableEnergy

HealthCareIncentive

HighlySpecializedIndustry


ADVANCEDENERGYCREDITAGAINSTGRT,COMPENSATINGTAX,WITHHOLDINGTAX,

PIT,ORCIT

Category: Environment,Conservation&RenewableEnergy

BriefDescription: AtaxpayerwhoholdsanownershipinterestinaqualifiedgeneratingfacilitylocatedinNewMexicomayclaimanadvancedenergycreditagainstGRT,compensatingtaxorwithholdingtax.Theallowablecreditis6%ofthecostsofdesigningandconstructingthequalifiedgeneratingfacility.Ifthecreditamountexceedsthetaxpayer’sGRT,compensatingtaxandwithholdingtaxliability,theexcessmaybeclaimedagainstthetaxpayer’sNewMexicoPITorCITreturn.AqualifiedgeneratingfacilityisonethatbeginsconstructionbeforeDecember31,2015andis:

(1) solarthermalelectric,

(2) solarphotovoltaicelectric,

(3) geothermalelectric,

(4) arecycledenergyproject,or

(5) neworrepoweredcoal‐basedelectric.

Theaggregateamountofalladvancedenergytaxcreditsthatmaybeclaimedwithrespecttoasinglequalifiedgeneratingfacilitymaynotexceedsixtymilliondollars($60,000,000).

Thecreditisnotrefundablebutmaybecarriedforwardforuptotenyears.

StatutoryBasis: 7‐2‐18.25,7‐2A‐25,and7‐9G‐2NMSA1978

IntendedPurpose: PresumablytoincentivizeinvestmentinrenewableenergygenerationfacilitiesbymitigatingalloraportionoftheGRT,compensatingtaxliability,withholdingtax,PIT,andCIT.

History: Originallyenactedin2007asacreditagainstGRT,compensatingtax,andwithholdingtax.

Amendedin2009toallowcreditamountsthatexceedstheclaimant’sGRT,compensatingtaxandwithholdingtaxliabilitytoclaimtheexcesscreditagainstPITandCIT;madetheGRT,compensatingtax,andwithholdingtaxcreditconformtothenewcredits.

Evaluation: ThelackofactivityinFY2009andFY2010islikelyattributable,atleastinpart,tothenewnessofthecreditatthattimeandthechangesthattookplaceinthe2009LegislativeSession.Itmaybethatthiscreditisusedlessthanwasanticipatedbecauseataxpayerwhoclaimsthiscreditisineligibletoclaimtheinvestmenttaxcreditoranyothercreditthatmaybetaken


againstPIT,CIT,GRT,compensatingtax,orwithholdingtaxliabilities.Inshort,thisstand‐alonecreditmaybelessattractivetothetaxpayerthanthecombinationofotheravailablecredits.

Recommendations: Thiscredithasnotbeenwidelyused,andthus,hasnotrealizeditsintendedpurpose.Ifacomprehensiveenergy‐relatedtaxprogramisbeingconsidered,thenthiscreditshouldberepealed.Ifnocomprehensiveprogramisbeingdeveloped,thenataminimum,considerallowingthecredittoexpire.

ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.

NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2016hasbeenredacted.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $645.1 $127.8 $5,417.1 $2,077.4 $1,586.2

Claims 3 5 145 29 123

0

20

40

60

80

100

120

140

160

$‐

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

CombinedTaxes(thousands)

AdvancedEnergyCreditsDatahavebeenredacted


ADVANCEDENERGYGRTANDCOMPENSATINGTAXDEDUCTION


BriefDescription: Receiptsfromsellingorleasingtangiblepersonalpropertyorservices,suchasdesign,construction,equipment,andequipmentinstallationtoapersonthatholdsaninterestinaqualifiedgeneratingfacilityaredeductibleiftheinterestholderinthefacilitydeliversanontaxabletransactioncertificatetotheseller.

Similarly,thevalueofeligiblegenerationplantcostsfromthesaleorleaseoftangiblepersonalpropertytoapersonwhoholdsaninterestinaqualifiedgeneratingfacilitymaybedeductedincomputingthecompensatingtax.

Theaggregateamountofalladvancedenergytaxdeductionsthatmaybeclaimedwithrespecttoaqualifiedgeneratingfacilityshallnotexceedsixtymilliondollars($60,000,000).TheNMENVcertifiesthequalifiedgeneratingfacility.

StatutoryBasis: 7‐9‐114NMSA1978

IntendedPurpose: ToencouragetheconstructionanddevelopmentofqualifiedgeneratingfacilitiesinNewMexicoandtosequesterorcontrolcarbondioxideemissions.

History: Originallyenactedin2010toallowadeductionforthesaleoftangiblepersonalpropertyorservicesthatareeligiblegenerationplantcosts.

Amendedin2011toallthedeductionofreceiptsfromtheleasingofthetangiblepersonalproperty.

Evaluation: EDDdoesnotcurrentlytrackthenumberoftemporaryconstructionjobsoreconomic‐basedjobsrelatedtothededuction.However,accordingtotheNMENV,whiletherearefewpermanentjobsassociatedwiththededuction,thenumberoftemporaryconstructionjobsfromtheprojectscertifiedbytheNMENVisnotable.

Assuming60newtemporaryconstructionjobswerecreated,andthepeopleemployedwouldnothavebeenotherwiseemployedinNewMexico,TRDestimatesthesejobswouldhavegeneratedapproximately$50thousandinPITrevenue.ThisestimatetakesintoaccounttheBureauofLaborandStatistics‐publishedaveragewagesfortheapplicablefields,assumingthetemporaryjobslastedanaverageofsixmonths.Makingcertainassumptionsaboutspending,GRTrevenueofapproximately$50thousandcouldresult.Otherformsofrevenue–insurancepremiumtax,propertytax,etc.–havelikelyalsobeengenerated,insmalleramounts.


Recommendations: Considerrepealing.Thisdeductionworksintandemwiththeadvancedenergycredit,andneitherarewidelyused.

ReliabilityFactor: 2‐Thisestimateisextrapolatedfromincompletetaxpayerinformation.Thelackofcompletereportingdiminishestheaccuracyofthisestimate.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTax $500.0 $500.0 $500.0 $500.0 $500.0 $500.0

$‐

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

Expenditures(thousands)

AdvancedEnergyDeduction


AFFORDABLEHOUSINGCREDITAGAINSTMODIFIEDCOMBINEDTAX,PIT,ORCIT

Category: CitizenBenefits

BriefDescription: AtaxcreditcanbeappliedagainstGRT(lesslocaloptiongrossreceiptstaxes),compensatingtax,withholding,PIT,CIT,E911,andotherCRStaxliabilitiesforinvestmentsinaffordablehousingprojectsequalto50%oftheamountofcashinvestedorthefairmarketvalueoftheland,buildings,materials,orservicesrelatingtosuchprojects.ThistaxexpenditureisavailabletotaxpayersreceivingataxcreditvoucherissuedbytheNewMexicoMortgageFinanceAuthority(“MFA”).

UndertheMFA’sprogram,thetaxcreditvoucherisadministeredbasedondonationsmadetoaffordablehousingprojectsandtheAffordableHousingCharitableTrust.In2006and2007,thetaxcreditvoucherwascappedat$200,000and$500,000respectively.Asof2008,itwassetatabaserateof$1.85multipliedbythereportedstatepopulationandadjustedannuallyforinflation.InFY2016,thiscapamountwillbeapproximately$4million.Donationsmayincludeland,buildings,materials,cashorservices.Cashequivalents,suchasstorecreditorwaivedinvoices,areconsideredacashdonation.Donationsreceivedbytheprojectsponsorinexchangefortaxcreditsmaybeusedtofundtheacquisition,substantialrehabilitation,and/ornewconstructionofaffordablehousingprojectsthroughoutthestate,includingdownpaymentandclosingcostassistanceforacquisitionofaffordablesinglefamilyhousing.NominimumormaximumdollarlimitsareplacedondonationsmadedirectlytotheAffordableHousingCharitableTrust.

Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.

StatutoryBasis: 7‐9I‐5NMSA1978

IntendedPurpose: Presumablytoincentivizetheconstructionofaffordablehousingprojects.

History: Originallyenactedin2005.

AnamendmenttotheAffordableHousingTaxCreditActin2010expandedwhereeligible“affordablehousingprojects”canbelocatedfromcountieswithapopulationoflessthan100,000toallcountiesandtoincludematerialsasanallowableinvestment.

Evaluation: MFAreportsthisprogramishighlyeffectiveinleveragingdonationsforaffordablehousingdevelopmentorganizationslikeHabitatforHumanity.Between2009and2014,theauthorityfacilitatedatotal288unitsofaffordablehousing(111multifamilyrentalunitsand177singlefamilyhomesforsale)representingareturnoninvestmentof$26.72foreverydollaroftaxcreditusedforaffordablehousingdevelopment.


Recommendations: None.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $84.0 $138.8 $1,389.2 $564.4 $831.0 $271.9

Count 79 102 208 142 177 30

0

50

100

150

200

250

$‐

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

$1,600.0


AffordableHousingCredits


AGRICULTURALBIOMASSCREDITAGAINSTPITANDCIT


BriefDescription: Adairyorfeedlotowneriseligibleforacreditof$5foreachwettonofagriculturalbiomassthatistransportedfromtheowner’sdairyorfeedlottoafacilitythatusesagriculturalbiomasstogenerateelectricityormakefuelsforcommercialuse.TheaggregateannualcombinedtotalofallagriculturalbiomassPITandCITcreditsiscappedat$5,000,000.

Asusedinthissection:(1) "agriculturalbiomass"meanswetmanuremeetingspecifications

establishedbyEMNRDfromeitheradairyorfeedlotcommercialoperation;

(2) "biocrude"meansanonfossilformofenergythatcanbetransportedandrefinedusingexistingpetroleumrefiningfacilitiesandthatismadefrombiologicallyderivedfeedstocksandotheragriculturalbiomass;

(3) "feedlot"meansanoperationthatfattenslivestockformarket;and

(4) "dairy"meansafacilitythatraiseslivestockformilkproduction.

StatutoryBasis: 7‐2‐18.26and7‐2A‐26NMSA1978

IntendedPurpose: Presumablytoincentivizethesaleanduseofagriculturalbiomassasafuel.


Evaluation: TodatetheEMNRDhasnotreceivedanyapplicationsforthistaxcredit.Duetotherecentannouncementofanagriculturalbiomassprojectthatisunderconstruction,EMNRDanticipatesclaimsforthiscredittoincrease.Duetocredittransferability,TRDhasreceivednumerousinquiriesregardingthiscreditfrombothin‐stateandout‐of‐statetaxcreditbrokers.Highlevelsoftransfersmayindicatethattheincentiveisnotproperlyscopedtothetaxpayersmostdirectlyinvolvedinthedesirablebehavior.

Recommendations: (1) Continuetomonitorandevaluatecreditutilizationtodeterminewhethertheincentiveiseffectiveinstimulatingthedesiredoutcomes;

(2) Continuetomonitortransferstodetermineproperscoping;

(3) Ifacomprehensiveenergy‐relatedtaxprogramisunderconsideration,thenrepealofthiscreditshouldalsobeconsidered;

(4) Consideramendingthestatutetoclarifyclaimproceduresanddeadlines,specificallytoprescribethetaxyearinwhichthecreditshouldbe


claimed.TRDaddressedthisissuethroughBulletinB‐300.16dated12/2016,indicatingthatthecreditmustbeclaimedforthetaxyearstatedintheEMNRDcertificateofeligibility.EMNRDpartiallyaddressedthisissuethroughitsregulations.Tyingthedeliveryofthebiomasstoataxyearpreventsunintendedcredit“stacking”andensuressmoothannualadministrationandawardingofthecredit.


FiscalImpact: None,todate.


AGRICULTURALWATERCONSERVATIONEXPENSESCREDITAGAINSTPITANDCIT


BriefDescription: CITandPITcreditsareavailableforagriculturalwaterconservationexpensesincurredbythetaxpayerforspecificimprovementsinirrigationsystemsorwatermanagementmethods.Theexpensesmustcomplywithawaterconservationplanapprovedbythelocalsoilandwaterconservationdistrictinwhichtheimprovementislocated.TheimprovementsmustbeprimarilydesignedtosubstantiallyconservewateronthelandinNewMexicothatisownedorleasedbythetaxpayerandusedtoproduceagriculturalproducts,harvestorgrowtrees,orsustainlivestock.

Thecreditamountis35%ofeligibleexpensesincurredincalendaryear2008and50%ofexpensesinsubsequentyearsthroughDecember31,2012whenthecreditexpired.

Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.Carryforwardclaimscancontinuetobemadethroughtaxyear2017.


IntendedPurpose: Presumablytoincentivizeresponsiblewatermanagementandtooffsetthecostofconservation‐drivenirrigationimprovementsincurredbytheindividualfarmerorrancher.

History: Originallyenactedin2007withadelayedrepealofJanuary1,2013.

Evaluation: Thenumberofclaimswasrelativelyhighearlyinthelifespanofthiscreditandhasreducedovertime.Aplausibleexplanationisthatthecreationofthecreditstimulatedthenecessaryinvestmentinirrigationsystemsandwatermanagementmethods.Furthermore,thiscreditisnotrefundablewhichmeansthatthetaxpayermusthaveenoughliabilityoversixyearstooffsetthecreditinordertogetthefullbenefitofthecredit.Oncetheseearlyinitialinvestmentsweremade,thereweresignificantlyfewerfarmerswiththerequisiteliabilitytoclaimthecreditwhoneededtomakethisinvestment.

Recommendations: EvaluatethestatusandadequacyofagriculturalwaterconservationintheStatetodeterminewhetheraneworrevisedincentiveshouldbeconsideredorimplemented.




FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

CITExpenditures $‐ $‐ $‐ $‐

PITExpenditures $10.7 $13.5 $26.8 $7.2

CITClaims ‐ ‐ ‐ ‐

PITClaims 5 3 8 4

‐123456789

$‐$5.0$10.0$15.0$20.0$25.0$30.0

CombinedTaxes(thousands) AgriculturalWaterConservationExpensesCredit

Datahavebeenredacted


AIRCRAFTSALESORSERVICESGRTDEDUCTION

Category: EconomicDevelopment

BriefDescription: Receiptsfromselling,maintaining,refurbishing,remodelingorotherwisemodifyingacommercialormilitarycarrierovertenthousandpoundsgrosslandingweightaredeductiblefromgrossreceipts.

StatutoryBasis: 7‐9‐62.1NMSA1978

IntendedPurpose: PresumablytoincentivizeamorerobustcommercialandmilitaryaircraftindustryinNewMexico.

History: Originallyenactedin2000andamendedin2005.

Amendedin2014toexpandthedeductionbyaddingthesaleofanaircraftover10,000poundstotheactivitiesthataredeductible.WithaneffectivedateofJuly1,2014,theimpactfromthisexpandeddeductionwillberealizedinFY2015.

Evaluation: Withthe2014changetothisdeduction,itistoosoontoevaluateitseffectiveness.Membersoftheimpactedindustrytoutthepotentialforsignificantnewbusinessopenedupbytheadditionofaircraftsalestothededuction.


ReliabilityFactor: 2–Thisdeductionisseparatelyreported.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

NOTE:Thedatahavebeenredactedduetofewerthan3taxpayerstakingthededuction.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT

0Expenditures(thousands)

AircraftServicesDeductionDatahavebeenredacted


ALTERNATIVEENERGYPRODUCTMANUFACTURERSCREDITAGAINSTMODIFIEDCOMBINEDTAX


BriefDescription: Manufacturersofcertainalternativeenergyproductswhohireatleastonenewemployeeforevery$500,000inqualifiedexpenditures(upto$30million)andforevery$1,000,000inqualifiedexpenditures(over$30million)mayreceiveataxcreditnottoexceed5%ofqualifiedexpendituresforpurchaseofmanufacturingequipmentusedinthemanufacturingoperation.


StatutoryBasis: 7‐9J‐1etseq.NMSA1978

IntendedPurpose: Presumablytoencouragehiringandinvestmentinthealternativeenergy productionsector.


The2011amendmentincludedproductsofsinglecellphotosyntheticorganismsaseligiblealternativeenergyproductsfortaxableyears2011through2019.

Evaluation: Thiscreditisunderused.AccordingtotheSolarEnergyIndustriesAssociation’swebsite,therearecurrentlymorethan100solarcompaniesatworkthroughoutthevaluechaininNewMexico,thesecompaniesprovideawidevarietyofsolarproductsandservicesrangingfromsolarsysteminstallationstothemanufacturingofcomponentsusedinphotovoltaicpanels(15manufacturers,10manufacturingfacilities,50contractor/installers,3projectdevelopers,8distributors,and23engagedinothersolaractivitiesincludingfinancing,engineeringandlegalsupport..TRDbelievestheemploymenteligibilityinvestmentthresholdrequirementsmaybetoohighforthiscredittobeusefultosmallmanufacturers.Additionally,manufacturersthatqualifyforthiscreditmayalsoqualifyfortheinvestmenttaxcredit,whichhasahighercreditrateandbettercarryforwardandcreditrefundprovisions.

Recommendations: Thereispotentialoverlapwiththeinvestmenttaxcredit(ITC).Consider:

(1)RepealingthiscreditandsubsumingitintheITC;or

(2)MakingtheITCandthiscreditmutuallyexclusiveandlowertheinvestmentandemploymentthresholdrequirementsforthealternativeenergyproductmanufacturers’taxcredit.Doingsowouldallowlargemanufacturers,eventhosethatproducealternativeenergyproducts,tousetheinvestmenttaxcredit.Yet,itwouldopenupthisincentivetosmalleralternativeenergyproductproducers.TRDwillcontinuetomonitorcredit


utilization,especiallywithrespecttothesinglesalesfactorphase‐informanufacturers,asthatelectionmaystimulateexpansionorlargerinvestmentinalternativeenergymanufacturinginNewMexico.Asthereareseveralcreditsanddeductionsforrelatedexpenses,acomprehensivereviewoftherelationshipsandinteractionsbetweentheserelatedexpenditurescouldexplainwhysomeofthemareunderused.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $‐ $587.1 $63.1 $56.8 $‐ $29.1

Claims ‐ 26 5 4 ‐ 11

‐

5

10

15

20

25

30

$‐$100.0$200.0$300.0$400.0$500.0$600.0$700.0$800.0$900.0

$1,000.0


AlternativeEnergyProductManfacturersCredit


ANGELINVESTMENTCREDITAGAINSTPIT


BriefDescription: Forpurposesofthis2016TaxExpenditureReport,ataxpayerwhofilesaNewMexicoPITreturnandmakesaqualifiedinvestmentmayclaimacreditinanamountnottoexceed25%ofnotmorethan$100,000ofthequalifiedinvestment($25,000).Tobeaqualifiedinvestment,itmustbeinabusinessthatmaintainsitsprincipalplaceofbusinessinNewMexicoandengagesinhigh‐technologyresearchormanufacturingactivitiesinNewMexico.

PriortoJanuary1,2015,EDD,inanycalendaryear,didnotissueeligibilitycertificatestoexceedthe$750,000cap.Theperiodforwhichthecreditmaybecarriedforwardisthreeconsecutiveyears.

FortaxyearsbeginningonorafterJanuary1,2015untilJanuary1,2025,2015legislationincreasedthecreditamountperinvestmentto$62,500andincreasedthenumberofqualifiedinvestmentsthatataxpayercouldmakepertaxyeartofive.Theaggregateannualcapwasalsoincreasedfrom$750,000to$2,000,000.Theperiodforwhichthecreditmaybecarriedforwardisfiveconsecutiveyears.


IntendedPurpose: Presumablytoincentivizetheinvestmentinhigh‐technologyresearchandmanufacturingactivitiesinNewMexicobyangelinvestors.

History: Originallyenactedin2007withadelayedrepealdateofJanuary1,2013.Thecreditwasamendedin2012and2015.

The2012amendmenteliminatedthedelayedrepealandextendedthedatebeforewhichaninvestmentmustbemadeinordertoqualifyforthecredit—fromDecember31,2011toDecember31,2016.The2015amendmentchangedthequalifiedinvestmentamount,relaxedthelimitsonthenumberofinvestments,increasedtheannualcapandextendedthecarryforwardperiod.

Evaluation: Whilethiscreditisbeingusedbyangelinvestors,priortothe2015amendments,thecreditwastoolimitingbothintermsofdollaramountandnumberofinvestments,toattractneededinvestment.The2015amendmentsintendedtoaddresstheseconcerns,butitistooearlytodeterminetheeffectivenessoftheamendments,asthetaxyear2015useofthiscreditwillnotbereporteduntilspringof2016,attheearliest.

Recommendations: Thereistensioninthestatutorylanguagethatshouldbecorrectedthroughclarifyinglegislation.SubsectionCprescribesthattheclaimmustbemadewithinoneyearofmakingtheinvestment.Yet,SubsectionEcontemplates


andallowsaqueuethatmayrendertheone‐yearclaimlimitationimpracticable.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $250.0 $310.8 $339.9 $384.5 $510.8

Claims 44 60 47 51 83

0

102030405060

708090

$‐

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

PIT(thousands)

AngelInvestmentCredit


APPORTIONMENTELECTIONOFCITFORMANUFACTURERS


BriefDescription: AtaxpayerwhoseprincipalbusinessactivityismanufacturingmayelecttohaveitsbusinessincomeapportionedtoNewMexicobyusingaformulawhichputsagreateremphasisonthetaxpayer’ssalesthanonthetaxpayer’spropertyorpayroll.Thetransitionfromallowingataxpayertouseadouble‐weightedsalesfactorformula(2014)toallowingataxpayertouseafullyphased‐insinglesalesfactorformulawillbecompletefortaxyearsbeginningonorafterJanuary1,2018.Fortaxyear2014,themostrecenttaxyearreported,theformulaprescribeda50%salesfactor.

StatutoryBasis: 7‐4‐10(B)NMSA1978

IntendedPurpose: Asenactedin1993,thepurposeforhavingthedouble‐weightedsalesfactorformulaelectionformanufacturerswastoencourageinvestmentandemploymentinthisstatebymanufacturerswhodonotanticipatesubstantialsalesrevenuewithinthisstate.Thispurposelanguagewasdeletedinthe2001amendment.Nonetheless,thepurposeforallowingmanufacturerstochooseanalternativeapportionmentformulapresumablyremainsthesame.

History: Originallyenactedin1993andamendedin2001,2002,2009,2013,and2015.

The2013amendmentprovidedaphase‐inoverfiveyearstheuseofasinglesalesfactorbytaxpayerswhoseprincipalbusinessactivityismanufacturing.

Evaluation: Whilethisexpendituredoesreducecorporateincometaxrevenuedirectly,thereisgoodevidencetoindicatethattheindirecteffectistocreateamorefavorablebusinessclimateformanufacturinginNewMexico.Forexample,theshareofGRTpaidbymanufacturershasincreasedfrom2.7%to4.2%oftotalGRTfromFY2009toFY2014.Inadditiontoallowingtheeventualelectionofsalesfactoronlyapportionment,the2013legislativechangesalsoincludedchangestothequalifyingrequirementsthatshouldincreasethestabilityandpredictabilityofthisexpendituregoingforward.Fullevaluationofthisexpenditurewillhavetocontinueovertime,asthephase‐inwillnotbecompleteuntil2018andmanystatesalreadyhaveafullyphased‐insinglesalesfactor.

Recommendations: Noneatthistime.

ReliabilityFactor: 2‐Thiselectionisreported.Someestimationisrequired.Differencesbetweenannualexpenditurereportsareattributedtotaxpayersfilinglate,oramendedreturns.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $18,877.6 $2,458.7 $1,618.7 $1,777.8 $13,368.1

Claims 18 19 18 19 25

0

5

10

15

20

25

30

$‐$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0$12,000.0$14,000.0$16,000.0$18,000.0$20,000.0

CIT(thousands)

ApportionmentElection


APPORTIONMENTELECTIONOFCITFORHEADQUARTERS


BriefDescription: AtaxpayerwhoseprincipalbusinessactivityisaheadquartersoperationmayelecttohaveitsbusinessincomeapportionedtoNewMexicobyusingasinglesalesfactor.

StatutoryBasis: 7‐4‐10(C)NMSA1978

IntendedPurpose: PresumablytoencouragecompaniestolocatetheirheadquartersorcenterofoperationsfortheirmanagerialactivitiesinNewMexico,therebyincreasingemploymentandeconomicactivitywithinthestate.

History: Originallyenactedin2015SpecialLegislativeSession.

Evaluation: Thisexpenditurecannotbeevaluatedatthistime.Initialdatabecameavailablein2016.

Recommendations: (1)Considerclarifyingthedefinitionof“headquarters.”TRDreceivesnumerousquestionsbasedonthelanguageofthecurrentdefinitions.

(2)Considereitherashifttomarket‐basedsourcingforalltaxpayersor,atminimum,fortaxpayersmakingthiselection.TheshifttoasinglesalesfactorforserviceprovidersthatlocateheadquartershereandperformamajorityoftheservicesfromlocationsinNewMexicowillnotcreatethedesiredincentivebecausethosecompanieswillhaveaveryhighsalesfactorinNewMexicoundertheincome‐producingactivity/costofperformancetestcurrentlyprescribedbySection7‐4‐18NMSA1978.

ReliabilityFactor: 2‐Thiselectionisreported.Someestimationisrequired.

FiscalImpact: Notapplicabletotimeperiodscoveredbythisreport.


ARMEDFORCESSALARIESEXEMPTIONFROMPIT


BriefDescription: AsalarypaidbytheUnitedStatesgovernmenttoataxpayerforactivedutyserviceinthearmedforcesoftheUnitedStatesisexemptfromPIT.


IntendedPurpose: Presumablytoprovideataxbenefitforourarmedforcespersonnel.


Evaluation: AccordingtheNewMexicoDepartmentofWorkforceSolutionstherewereover17,500employedbytheU.S.militaryinNewMexicoin2014orabout2%oftotalemployment.AccordingtotheU.S.Census,StatisticalAbstractoftheUnitedStates2012,in2009therewere11,000activemilitarypersonnelinNewMexico.


ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $1,554.2 $1,448.8 $1,630.8 $1,712.0 $1,815.1

Claims 12,990 10,872 11,466 11,251 11,315

9,500

10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

$‐$200.0$400.0$600.0$800.0

$1,000.0$1,200.0$1,400.0$1,600.0$1,800.0$2,000.0

PIT(thousands)

ArmedForcesSalariesExemption


BACK‐TO‐SCHOOLTAX‐FREEWEEKENDGRTDEDUCTION


BriefDescription: Receiptsfromretailsalesofspecifiedtangiblepersonalpropertyifthesaleoccursduringthefirstfullweekend(FridaythroughSunday)inAugustaredeductiblefromgrossreceipts.Thepropertyspecifiedbythisstatuteincludescertainclothingvaluedunder$100,computersvaluedunder$1,000,computeraccessoriesvaluedunder$500,andschoolsupplies.


IntendedPurpose: Presumablytoreducethecostofschoolsuppliesandschoolclothes.


Evaluation: Withoutdirectdataevaluatingtheeffectivenessofthisdeductionisdifficult.Thevaluelimitsondeductibleitemsarefixed,andcouldbecomelessappropriateovertimewithinflation.


ReliabilityFactor: 4‐Nodirectdataexiststoestimatethisdeduction.TRDrequirestaxpayerswhotakeadvantageofthisdeductiontoseparatelyreportthedeductibleamount,butthereisnostatutoryauthoritytoenforcethereportingrequirement.TheestimateisbasedonapercentageofAugust2016retailsalesgrossreceiptsidentifiedforspecificNAICScodesasreportedbytaxpayers.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $3,100.0 $3,500.0 $3,300.0 $3,400.0 $3,500.0 $3,300.0

$2,900.0

$3,000.0

$3,100.0

$3,200.0

$3,300.0

$3,400.0

$3,500.0

$3,600.0


Back‐to‐SchoolTax‐FreeWeekend


BIODIESELBLENDINGFACILITYTAXTHIRTYPERCENTCREDITAGAINSTGRTANDCOMPENSATINGTAX


BriefDescription: AtaxpayerwhoisarackoperatorasdefinedintheSpecialFuelsSupplierTaxAct,andwhoownsandinstallsbiodieselblendingequipmentatitsfacilitytoproduceblendedbiodieselfuelmayclaimaGRTorcompensatingtaxcredit.Thecreditis30%ofthepurchaseandinstallationcostofequipment.

Biodieselisarenewableandbiodegradablefuelderivedfromagriculturalplantoilsoranimalfat.Blendedbiodieselfuelisadieselfuelthatcontainsatleast2%biodiesel.

Thecreditisnotrefundablebutmaybecarriedforwardforuptofouryears.


IntendedPurpose: Presumablytoincentivizetheestablishingorexpansionofafacilitythatproducesblendedbiodieselfuel.


Evaluation: Thiscredithasnotbeenclaimed.AccordingtoEMNRD’sEnergyConservationandManagementDivision,noapplicationsforthiscreditweresubmittedforFY2016.


ReliabilityFactor: 1‐Thiscreditisrequiredtobeseparatelyreported.Ifclaimedinthefuture,noestimationwillberequired.

FiscalImpact: Notaxpayershaveclaimedthiscredit.


BIOMASS‐RELATEDEQUIPMENTANDBIOMASSMATERIALSDEDUCTIONFROMCOMPENSATINGTAX


BriefDescription: Thevalueofabiomassboiler,gasifier,furnace,turbine‐generator,storagefacility,feedstockprocessingordryingequipment,feedstocktrailerorinterconnectiontransformer,andthevalueofbiomassmaterialsusedforprocessingintobiopower,biofuelsorbiobasedproductsisdeductiblewhencomputingthecompensatingtaxdue.


IntendedPurpose: Presumablytoincentivizetheuseofbiomassmaterials.


Evaluation: AccordingtoEMNRD,severalnewbioenergyprojectsarecurrentlyunderwayinthestateandinvolvepartnershipsbetweenfederalagencies,localgovernments,NewMexicohighereducationinstitutions,andforeignentities.Therearecurrentlynoprivately‐ownedbiomasspowergeneratorsinNewMexico.TheNMENVreportsAlbuquerque’sSouthsideWaterReclamationPlantistheonlybiomasspowergenerator(netpowerproducer)inthestate.TheLasCrucesWasteWaterTreatmentPlantalsocreatesbiogasbutwithoutexportingenergytothegrid.NMENVnotesthereareahandfulofverysmallscaleprojectscurrentlyunderwayinotherpartsofthestatethatinvolveschoolsusingbiomassboilersforheating.EMNRDreportstwobiomassprojectsinthestateutilizewoodchipfueledpowersystemsandanotherusesasteamboilerthatuseslumbermillresiduesandforestthinningsforfuel.NewconstructionincludesanaerobicdigesternearRoswellthatusesdairywastetocreatebiogasandanotherfacilitynearClovisdesignedtouseconstructionwaste,wastewaterandsludge.Neitherhasbegunoperatingyet.

Notethatthisdeductioncanonlybetakenagainstcompensatingtax,whichcouldincentivizefirmstopurchaseequipmentandfeedstockoutofstate.

Recommendations: IncludeaGRTdeductionaswell.

ReliabilityFactor: 4‐Intheabsenceofanysourceofdirectdata,anaccurateestimateoftheimpactofthisdeductionisproblematic.TheU.S.DepartmentofEnergyestimatedapriceof$20to$80pertonofforestbiomassandwoodwastebiomassfuel.Usingthatinformationandagenerousestimateof20,000tonsofbiomassfuelusedannually,atanaveragepriceof$40perton,theimpactofthedeductionwouldbeabout$55,000.Thedeductionamountismultipliedbythe5.125%compensatingtaxrateforeachyeartoestimatethecost.Thecostcouldincreasedramaticallyifandwhenthenewpowergeneratorscomeonline.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CompTax $55.0 $55.0 $55.0 $55.0 $55.0 $55.0

$‐

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0


Biomass‐RelatedEquipmentandBiomassMaterialsDeduction


BLENDEDBIODIESELFUELCREDITAGAINSTPITANDCIT


BriefDescription: AtaxpayerwhoisliableforpaymentofthespecialfuelexcisetaxiseligibletoclaimacreditagainstPITorCITliabilityforeachgallonofblendedbiodieselfuelonwhichthatpersonpaidorwouldhavepaidthespecialfuelexcisetaxinthetaxableyear.Thisblendedbiodieselfuelisa3%mixtureofbiodieselwhichisadifferentmixturefromvegetableoilwhichis99%biodiesel.Thecreditamountwasphaseddownfrom3centspergallonto1centpergallonoverthelifeoftheincentive,whichexpiredDecember31,2012.



IntendedPurpose: Presumablytoincentivizetheestablishmentorexpansionofafacilitythatproducesblendedbiodieselfuel.

History: Originallyenactedin2007withanexpirationofDecember31,2012.

Evaluation: Thecreditsawadecreaseasthevalueofthecreditreduced(from2007‐2010,thecreditwas$0.03pergallon;in2011,itwas$0.02pergallon;andin2012,itwas$0.01pergallon).ThecreditisnotavailableafterDecember31,2012andtheonlypossibilityforfurtherexpendituresfromthiscreditwouldbeduetotheuseofacarryforwardoramendedreturn.

Recommendations: Thiscreditisnotwidelyused,andthus,hasnotrealizeditsintendedpurpose.Ifacomprehensivefuel‐relatedtaxprogramisbeingconsidered,thenthiscreditshouldberepealed.Otherwise,thecreditshouldberepealedafterthecarry‐forwardandclaimantperiodexpire.


NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2011andFY2013havebeenredacted

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $‐ $‐ $‐ $‐

Claims 0 0 0 0

$‐

$50.0

$100.0

Expenditures

(thousands)

BlendedBiodieselFuelCreditDatahavebeenredacted


BORDER‐ZONETRADE‐SUPPORTCOMPANYGRTDEDUCTION

Category: HighlySpecializedIndustry

BriefDescription: Thereceiptsofatrade‐supportcompanyaredeductiblefromgrossreceiptsif:

(1) thetrade‐supportcompanyfirstlocatesinNewMexicowithintwentymilesofaportofentryonNewMexico'sborderwithMexicoonorafterJuly1,2003butbeforeJuly1,2013;ortheylocateinaborder‐zoneafterJuly1,2016butbeforeJanuary1,2021;

(2) thereceiptsarereceivedbythecompanywithinafive‐yearperiodbeginningonthedatethetrade‐supportcompanylocatesinNewMexicoandthereceiptsarederivedfromitsbusinessactivitiesandoperationsatitsborderzonelocation;and,

(3) thetrade‐supportcompanyemploysatleasttwoemployeesinNewMexico.

A"trade‐supportcompany"meansacustomsbrokeragefirmorafreightforwarder.


IntendedPurpose: Presumablytoincentivizethelocationoftrade‐supportcompaniestosupportandincreaseeconomicactivitiesatthevariousportsofentry(SantaTeresa,Columbus,andAntelopeWells).

History: Originallyenactedin2003,amendedin2007and2015toextendthecreditandaddreportingrequirements.

Evaluation: Thetradesupportsectorasdefinedinthisdeductionisverysmallandfocused.Eveniffullyused,itonlyappliestoasmallnumberoftaxpayers.


ReliabilityFactor: 2–Allgrossreceiptsdeductionsfortaxpayersclassifiedastradesupportcompanies,pertheRP‐80report,locatedinthefollowinglocationsareassumedtoderivefromthisdeduction:SunlandPark,AnthonyandunincorporatedareasinLuna,DonaAna,andHidalgoCounties.Thismayresultintheover‐estimationofthisdeductionasthetradesupportclassificationdoesnotmatchupperfectlytothedefinitionoftaxpayerswhoareeligibletotakethisdeduction.Furthermore,thesecompaniescouldbeeligibleforadditionaldeductionswhichwouldmeanthatnotalloftheirdeductedamountsareattributabletothisdeduction.Thedeductible


amountsreportedaremultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $62.1 $28.5 $22.7 $235.9 $453.5 $271.5

Count 60 30 35 235 450 269

050100150200250300350400450500

$‐$50.0$100.0$150.0$200.0$250.0$300.0$350.0$400.0$450.0$500.0


Border‐ZoneTrade‐SupportCompanyDeduction


BUSESOPERATEDBYRELIGIOUSANDNONPROFITCHARITABLEORGANIZATIONS

EXEMPTIONFROMWDT


BriefDescription: UseofthehighwaysinNewMexicobybusesoperatedbyreligiousornonprofitcharitableorganizationsisexemptfromtheWDT.

StatutoryBasis: 7‐15A‐5(C)NMSA1978

IntendedPurpose: Presumablytosubsidizetheactivitiesoforganizationsthefederalgovernmenthasdeterminedtobeperformingsocially‐beneficialactivities.


Evaluation: Itisunknownwhythenumberofbusesregisteredasnonprofithasbeendecreasing.


ReliabilityFactor: 3–ThenumberofbusesregisteredasnonprofitwascollectedfromMVD.ExemptmilesarenotreportedonanyWDTform,soaveragemilestraveledperschoolbuswerecalculatedfromnationalschoolsources.Weightwascalculatedasanaverageofweightsbetween26,000and30,000poundsgrossvehicleweightrating(GVWR),whichmosttypeCbusesare.TheseestimatesmayhavechangedfrompreviousyearsbecauseofbetterMVDtrackingofqualifiedvehicles.

FiscalImpact:

FY2012 FY2013 FY2014 FY2015 FY2016

WDT $83.4 $73.4 $68.8 $62.8 $59.8

Buses 509 448 420 383 365

0

100

200

300

400

500

600

$‐$10.0$20.0$30.0$40.0$50.0$60.0$70.0$80.0$90.0


BusesOperatedbyReligiousandNonprofitCharitableOrganizationsExemption


BUSESUSEDFORTRANSPORTATIONOFAGRICULTURALLABORERSEXEMPTIONFROMWDT


BriefDescription: UseofthehighwaysinNewMexicobybusesusedexclusivelyforthetransportationofagriculturallaborersisexemptfromtheWDT.

StatutoryBasis: 7‐15A‐5(B)NMSA1978

IntendedPurpose: Presumablytoincreasetheproductionofagriculturalproductsbyloweringthecostsoflaborforagriculturalproducers.


Evaluation: None.


ReliabilityFactor: 3–ThenumberofbusesregisteredforagriculturalusewascollectedfromMVD.ExemptmilesarenotreportedonanyWDTform,andnopublicsourceisavailableformilestraveledbyagriculturalbuses.Thereforeaveragemilestraveledperschoolbuswascalculatedfromnationalschoolsources(schoolbusesoperateonasimilartwice‐a‐dayschedule).Weightwascalculatedasanaverageofweightsbetween26,000and30,000poundsgrossvehicleweightrating(GVWR),whichmosttypeCbusesare.TheseestimatesmayhavechangedfrompreviousyearsbecauseofbetterMVDtrackingofqualifiedvehicles.

FiscalImpact:

FY2012 FY2013 FY2014 FY2015 FY2016

WDT $3.6 $4.1 $6.2 $5.9 $5.7

Buses 22 25 38 36 35

0510152025303540

$‐

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0


BusesUsedforTransportationofAgriculturalLaborersExemption


BUSINESSFACILITYREHABILITATIONCREDITAGAINSTPITANDCIT


BriefDescription: Ataxpayerwhoownsaqualifiedbusinessfacilityinanenterprisezoneandrestores,renovates,orrehabilitatesitmayreceiveacreditof50%perprojectcost(upto$50,000)onPITandCITowedtoNewMexico.

A“qualifiedbusinessfacility”isabuildingvacantforatleast24monthsandintendedtobeputintousebyapersoninthemanufacturing,distributionorserviceindustries.Culturalorhistoricpropertiesdonotqualifyforthiscredit.

Thecreditisnotrefundablebutmaybecarriedforwardforuptofouryears.


IntendedPurpose: TostimulatethecreationofnewjobsandrevitalizeeconomicallydepressedareaswithinNewMexicoenterprisezones.


Evaluation: Thecredithasnotbeenusedbecausemostindividualsdonothaveenoughtaxliabilitytoapplythecredit.Qualifiedindividualsandcorporationswhotakethiscreditarenoteligiblefortheinvestmentcreditwhichprovidesahigherbenefit.AccordingtoEDD,therearecurrentlynoenterprisezonescompletingtherequiredannualreporting,whichindicatesthattheenterprisezonesthatwereestablishedwhenthiscreditwasoriginallyenactedhaveexpired.

Recommendations: Astherearecurrentlynoenterprisezones,eitherconsiderrepealingtheEnterpriseZoneActandthiscreditandreplacingitwithanothermechanismtospurredevelopmentorconsideramendmentsthatwouldaccomplishthatresult.


NOTE:DatainFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Otheryearshavenoclaims.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

PITExpenditures $‐ $‐ $‐ $‐ $‐

CITExpenditures $‐ $‐ $‐ $‐ $‐

$‐$50.0$100.0

Expenditures

(thousands) BusinessFacilityRehabilitationCredit

Datahavebeenredacted


CAPITALGAINDEDUCTIONFROMPIT


BriefDescription: Ataxpayermayclaimadeductionfromnetincomeinanamountequaltothegreaterof:

(1) thetaxpayer'snetcapitalgainincomeforthetaxableyearforwhichthedeductionisbeingclaimed,butnottoexceed$1,000;or

(2) 50%ofthetaxpayer'snetcapitalgainincomeforthetaxableyearforwhichthedeductionisbeingclaimed.

Ataxpayermaynotclaimthisdeductionifthetaxpayerpaysfederalincometaxonaqualifieddiversifyingbusinessnetcapitalgainhasclaimedacreditagainstthetaxpayer'sNewMexicoPITliabilityequaltoacapitalgaintaxdifferential,ifthetaxpayerallocatesthequalifieddiversifyingbusinessnetcapitalgaintoNewMexico.


IntendedPurpose: Capitalgaindeductionsexisttoincentivizesavingsandinvestment.PresumablythisdeductionismeanttoencouragetaxpayerstoputtheirincometoproductiveusebyprovidinganincentivetoinvestincompaniesandtorecruitindividualsearninginvestmentincometoNewMexico.

History: Originallyenactedin1999andamendedin2003.The2013amendmentexpandedthecapitalgainsdeductionsimultaneouslywiththereductioninincometaxrates.

Evaluation: None.


ReliabilityFactor: 1–Thedeductionamountsforeachtaxpayerclaimingthisdeductionwerecomputed,makingthisdatamorereliablethaninpastyears,whichusedanaveragerateforalltaxpayers.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $33,220.6 $26,255.9 $47,079.5 $32,593.6 $47,241.4

Claims 58,594 69,953 82,549 96,545 106,283

0

20,000

40,000

60,000

80,000

100,000

120,000

$‐$5,000.0$10,000.0$15,000.0$20,000.0$25,000.0$30,000.0$35,000.0$40,000.0$45,000.0$50,000.0

PIT(thousands)

CapitalGainDeduction


CERTAINDISABLEDMILITARYVETERANEXEMPTIONFROMMVX


BriefDescription: ApersonisexemptfromtheMVXifthepersonisaresidentofNewMexicowhoservedinthearmedforcesoftheUnitedStatesandwhosuffered,whileservinginthearmedforcesorfromaservice‐connectedcause,thelossorcompleteandtotallossofuseof:

(1) oneorbothlegsatorabovetheankle;or

(2) oneorbotharmsatorabovethewrist.

StatutoryBasis: 7‐14‐6(E)NMSA1978

IntendedPurpose: Presumablytoeasethetaxburdenofindividualswhoseserviceinthearmedforcesresultedindisability.

History: Originallyenactedin1978andamendedin1988,1990,19954,2004,and2007toincludeSubsectionE.

Evaluation: Thistaxexpendituremeetsitsintendedpurposeofloweringthetaxburdenofdisabledveterans.Theestimatedfiscalimpactofthisexpendituresuggeststhattheexemptionfromtheexcisetaxhashadapositiveeffectonvehiclepurchases.


ReliabilityFactor: 3‐ThenumberofdisabledveteransintheStateofNewMexicowasobtainedfromtheDepartmentofVeteranServices.Thenationalaveragepricesofnewandusedvehicleswerecollectedfortheyearsof2008through2015.PertheUniversityofMichiganTransportationResearchInstitute,in2011,1outof19.7driversboughtavehicle,eitherneworused.Thetotalnumberofdisabledveteranswasdividedby19.7andthenmultipliedbytheaveragepriceofanewandusedvehicle.TheresultingdollaramountwasmultipliedbytheMVXrateof3%.TheDepartmentofVeteransServicesdidnothavedataavailableforFY2016onthenumberofdisabledveteransinNewMexico.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

MVX $1,220.0 $1,260.0 $1,300.0 $1,350.0 $1,454.0

$1,100.0$1,150.0$1,200.0$1,250.0$1,300.0$1,350.0$1,400.0$1,450.0$1,500.0


CertainDisabledMilitaryVeteranExemption


CHILDCARETOPREVENTINDIGENCYCREDITAGAINSTPIT


BriefDescription: AnyresidentwhofilesaPITreturnandwhoisnotadependentofanothertaxpayermayclaimacreditforchilddaycareexpensesincurredandpaidtoacaregiverinNewMexicoduringthetaxableyear.Thecreditisavailabletoataxpayerwhohasamodifiedgrossincome,includingchildsupportpayments,ifany,ofnotmorethantheannualincomethatwouldbederivedfromearningsatdoublethefederalminimumwage.

Thecreditisfor40%ofactualcompensationpaidtoacaregiverandmaynotexceed$480foreachqualifyingdependentor$1,200forallqualifyingdependentsinanytaxableyear.


IntendedPurpose: Presumablytoprotectthehealth,safetyandwell‐beingofchildrenoflow‐incomefamiliesandtogivetheparentsanopportunitytoplacetheirchildrenindaycarewhiletheywork.

History: Originallyenactedin1981andamendedin1990,1995,1999,and2015.

Evaluation: In2011,increasedauditandcomplianceeffortsbyTRDindicatedthatthiscreditwasbeingover‐utilizedbynon‐qualifiedtaxpayers.Manytaxpayerswhopreviouslytookthecreditcouldnotprovideproperdocumentationandweredeniedthecredit.Sometaxpayersreportexpendituresfornon‐qualifiedchildcare(carerenderedbygrandparents,relatives,etc.)ortheywerenotworkingwhenthecreditwasclaimed,whichisarequirementforeligibility.Theauditandcompliancemeasuresresultedinadeclineinthenumberofclaimsmade.


ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $1,272.2 $404.7 $376.0 $477.3 $624.2

Claims 1,177 1,265 1,544 1,628 1,540

‐

500

1,000

1,500

2,000

$‐$200.0$400.0$600.0$800.0

$1,000.0$1,200.0$1,400.0

PIT(thousands)

ChildCareCredit


COALEXEMPTIONFROMSEVERANCESURTAX


BriefDescription: Thefollowingexemptionsarecurrentlyineffect:(1)coalsoldanddeliveredpursuanttogenuinelynewcontractsenteredintoonorafterJuly1,1990;(2)coalsoldanddeliveredpursuanttocontractsalreadyineffectonJuly1,1990,thatexceedstheannualizedaveragecalendaryeardeliveriesunderthecontractduringproductionyears1987,1988,and1989,unlessthedeliveriesarereducedduetocausesbeyondthereasonablecontrolofeitherpartytothecontract:and(3)ifacontractexistingonJuly1,1990,andrenegotiatedafterMay20,1992,requiresthepurchasertotakeannualcoaldeliveriesinexcessofthegreateroftheaveragecalendaryeardeliveriesfrom1978‐1989orthehighestannualcontractminimumfrom1978‐1989,thesurtaxdoesnotapplytosuchexcessdeliveriesfortheremainingtermoftherenegotiatedcontract.


IntendedPurpose: PresumablythistaxexpenditureisanincentiveforincrementalproductionbytheNewMexicocoalminingindustry,providingreducedtaxliabilityunderneworrestructuredcontracts.


Evaluation: Thetaxexpenditureprovidedthroughthisexemptiondirectlybenefitsthecoalminingindustrybyprovidingexemptionfromtheseverancesurtaxforproductionofcoalquantitiesthatareinexcessofthegreateroftheaveragecalendaryeardeliveriesfrom1978‐1989orthehighestannualcontractminimumfrom1978‐1989.Since2010,newagreementshavebeenenteredintowhichhaveresultedinpreviouslyunallowableactivitytobeeligibleforthisexemption.


ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.FY2016dataisnotyetavailable.


Fiscalimpact

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $25,098.3 $26,071.3 $27,376.8 $22,673.6 $17,210.0

Count 4 4 3 4 4

0

0.511.522.5

33.544.5

$‐

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0

SeveranceSurtax(thousands)

CoalExemption


COMMERCIALMOTORCARRIERVEHICLESOPERATINGEXCLUSIVELYWITHIN10MILESOFMEXICOBORDER

EXEMPTIONFROMTRIPTAXANDWDT


BriefDescription: UseofNewMexicohighwaysbycommercialmotorcarriervehicleswhileoperatingexclusivelywithin10milesofaborderwithMexicoinconjunctionwithcrossingtheborderwithMexicoisexemptfromthetriptaxandtheWDT.

StatutoryBasis: 7‐15‐3.2and7‐15A‐5(D)NMSA1978

IntendedPurpose: Presumablytoincentivizecompaniesthathavecross‐borderactivitiestodobusinessinNewMexicoinsteadofTexasandArizona.


Evaluation: TheNewMexicoBorderAuthorityreportsthatthenumberofcommercialvehiclescrossingtheborderwithMexicohasincreasedsinceFY2011.ThistaxexpendituremeetsitsintendedpurposeofcreatingacompetitiveenvironmentforbusinessinNewMexico.TheopeningofthelargeUnionPacificintermodaltransferyardin2014nearSantaTeresaalsoindicatesthisexpendituremeetsitsintendedpurpose.


ReliabilityFactor: 3‐DatafortruckentriesatSantaTeresawasobtainedfromtheU.S.DepartmentofTransportation(“USDOT”).TheportatColumbushasveryfewifanyfacilitiesfortransferoffreightandsowasnotincluded.FromconversationswithNMDOTitwasassumedthatalloftheSantaTeresaentrytrafficwouldstaywithinthe20mileNorthAmericanFreeTradeAgreementcommercialzone,andwasdestinedforthelargeUnionPacifictransferstation10milesfromtheborder,orothernearbyfreighttransferfacilities.20milesperentrywasassumedforaround‐triptotalroadmilescalculation.ThetotalnumberofmileswasthenmultipliedbytheaverageWDTrateofalltheweightclasses.Thesameprocedurewasfollowedtocalculatethetriptaxexpenditure.EstimatesforthisexpenditurehavechangedforthisTaxExpenditureReportbecausetheuseofUSDOTtruckentrystatisticsallowsabetterestimateofhowmuchthisexemptionisused.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

WeightDistance $40.1 $39.6 $41.8 $43.8 $48.2 $60.0

TripTax $191.0 $188.0 $199.0 $209.0 $229.0 $285.0

$‐

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0


CommercialMotorCarrierVehiclesOperatingExclusivelywithin10MilesofMexicoBorderExemption


CONSTRUCTIONEQUIPMENTANDMATERIALSUSEDINTHECONSTRUCTIONOFSOLECOMMUNITYPROVIDERHOSPITALS

GRTDEDUCTION

Category: HealthCare

BriefDescription: ReceiptsfromsalesofconstructionequipmentorconstructionmaterialstoafoundationornonprofitorganizationforuseinthenewfacilityconstructionofaSoleCommunityProviderHospitallocatedinafederallydesignatedhealthprofessionalshortageareaaredeductiblefromgrossreceiptsundercertaincircumstances.


IntendedPurpose: Presumablytoreducethecostsofconstructingsolecommunityproviderhospitals.


Evaluation: AccordingtotheHSD,theMedicarePrescriptionDrug,Improvement,andModernizationActof2003establishedaruralcommunityhospitaldemonstrationprojectfor5yearstostudyareasonablereimbursementmethodologyforsuchhospitals.Section10313oftheAffordableCareActexpandedandextendedthisdemonstrationforanother5yearsuntil2013.HolyCrossHospitalinTaos,NMparticipatedinthisdemonstration,butwithdrewin2011.SanMiguelHospitalCorporationinLasVegas,NMwasselectedtoparticipateinthisdemonstrationundertheexpansionandextensionofthisprogrambytheACA.However,becausetheextensionforthefederalpilotprogramhasexpired,therearenomorefederalmatchingfundstosupporttheservicesprovidedatsolecommunityproviderhospitals.Asaresult,andbasedoninformationreceivedfromHSD,TRDisunawareofanyrecentnewconstructionofsolecommunityproviderhospitals.

Recommendations: BecausetheAffordableCareActdidnotprecludeanentityfrombuildingormakingcapitalinvestmentsinrural(sole)communityproviderhospitals,thedeductioncouldstillfulfillitspurposeasruralhealthfacilitiesfindalternativesourcesoffundingforoperations.

ReliabilityFactor: 1‐NonewsolecommunityproviderhospitalswerebuiltinNewMexicooverthelastseveralyears.Noestimationisrequired.

FiscalImpact: Notaxpayershaveclaimedthisdeduction.


CONSTRUCTIONOFSOLECOMMUNITYPROVIDERHOSPITALSGRTDEDUCTION


BriefDescription: Receiptsfromthesaleofengineering,architectural,andconstructionservicestoafoundationornonprofitorganizationforuseinthenewfacilityconstructionofaSoleCommunityProviderHospitallocatedinafederally‐designatedhealthprofessionalshortageareaaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoreducethecostsofconstructingsolecommunityproviderhospitals.


Evaluation: AccordingtotheHSD,theMedicarePrescriptionDrug,Improvement,andModernizationActof2003establishedaruralcommunityhospitaldemonstrationprojectfor5yearstostudyareasonablereimbursementmethodologyforsuchhospitals.Section10313oftheAffordableCareActexpandedandextendedthisdemonstrationforanother5yearsuntil2013.HolyCrossHospitalinTaos,NMparticipatedinthisdemonstration,butwithdrewin2011.SanMiguelHospitalCorporationinLasVegas,NMwasselectedtoparticipateinthisthisdemonstrationundertheexpansionandextensionofthisprogrambytheACA.However,becausetheextensionforthefederalpilotprogramhasexpired,therearenomorefederalmatchingfundstosupporttheservicesprovidedatsolecommunityproviderhospitals.AsaresultandbasedoninformationreceivedfromHSD,TRDisunawareofanyrecentnewconstructionofsolecommunityproviderhospitals.

Recommendations: BasedonthepresumptionthattheAffordableCareActdidnotprecludeanentityfrombuildingormakingcapitalinvestmentsinrural(sole)communityproviderhospitals,thisdeductionwouldbeabletofulfillitspurposeasruralhealthfacilitiesfindalternativesourcesoffundingforoperations.

ReliabilityFactor: 3‐TRDusedalistofsolecommunityproviderhospitalspublishedbytheU.S.DefenseHealthAgency,asingleapplicablehospital—GuadalupeCountyHospitalinSantaRosa—wasfoundtobeconstructedwithinthistimeperiod.Anestimatedconstructioncostof$10millionwasusedtoestimatethecostofthededuction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedatadonotcomefromtaxreturninformation;rather,itcomesfromindependentsources.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $800.0 $‐ $‐ $‐ $‐ $‐

$‐

$100.0

$200.0

$300.0

$400.0$500.0

$600.0

$700.0

$800.0

$900.0

$1,000.0


ConstructionofSafetyNetCarePoolHospitalsDeduction


CONTRIBUTIONSOFINVENTORYTONONPROFITORGANIZATIONSORGOVERNMENTALAGENCIES

DEDUCTIONFROMCOMPENSATINGTAX


BriefDescription: ThevalueoftangiblepersonalpropertythatisremovedfrominventoryandcontributedtoaU.S.orNewMexicogovernmententityorthegoverningbodyofanIndiannation,tribe,orpuebloforuseonanIndianreservationorpueblograntorto501(c)(3)organizations,isdeductibleincomputingthecompensatingtaxdue.


IntendedPurpose: Presumablytoincentivizethecontributionofinventorytogovernmententitiesandnonprofitorganizations.


Evaluation: None.

Recommendations: Removethecross‐overPITdeductionunder§7‐9‐91(A)forownersofapass‐throughentityfromthiscompensatingtaxdeduction.Thelegalincidentofcompensatingtaxisonthebusiness,evenifthatbusinessisapass‐throughentity.Compensatingtaxesdonotgenerallyflowthroughtoowners.Asamatterofclarity,havingaPITdeductionburiedinthelanguageofacompensatingtaxdeduction,whenthereisnocorrespondingreferencetothedeductionwithinthePITstatutes,isproblematic.TRDsuggestseliminatingtheflow‐throughdeduction.

ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpactofthisdeduction.

FiscalImpact: Unknown.


CONVEYANCEOFLANDFORCONSERVATIONORPRESERVATIONFIFTYPERCENTCREDITAGAINSTPITANDCIT


BriefDescription: TaxpayersmayreceiveacreditagainstCITorPITfordonationsoflandorinterestsinlandif:(1)thedonationisforthepurposeofopenspace,naturalresourceorbiodiversityconservation,agriculturalpreservationorwatershedorhistoricpreservationbythelandownerortaxpayer;and(2)thedoneeisapublicorprivateconservationagencyeligibletoholdthelandandintereststhereinforconservationorpreservationpurposes.Thecreditequals50%ofthefairmarketvalueoflandorinterestthereinthatwasdonated.

Theamountofthecreditthatmaybeclaimedbyataxpayershallnotexceed$100,000foraconveyancemadepriortoJanuary1,2008andshallnotexceed$250,000foraconveyancemadeonorafterthatdate.

Thecreditisnotrefundablebutmaybetransferredinincrementsof$10,000ormoreormaybecarriedforwarduptotwentyyears.

Ataxpayermayclaimonlyonetaxcreditpertaxableyear.

StatutoryBasis: 7‐2‐18.10and7‐2A‐8.9NMSA1978

IntendedPurpose: ThesecreditswereenactedaspartoflegislationthatenactedtheLandConservationIncentivesAct,thepurposeofwhichwastoencourageprivatelandownerstobestewardsoflandsthatareimportanthabitatareasorconcernsignificantnatural,openspaceandhistoricresourcesbyprovidingprivatelandownerswithincentivesthatencouragetheprotectionofprivatelandsforopenspace,naturalresources,biodiversityconservation,outdoorrecreation,farmlandandforestlandpreservation,historicpreservationandlandconservationpurposes.


Evaluation: Asdemonstratedbythechartsbelow,for2012through2015,55,146acresofland(orintereststherein)havebeenconveyedforthepreservationandconservationpurposesatatotalcostof$5,864,400totheState.Theresultingaveragecostperacreis$105.Basedonthecostperacre,thiscreditappearstobeaneffectivemechanismforensuringconservationandpreservation.




FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $2,534.1 $2,006.8 $675.1 $1,734.4 $1,448.1

Claims 17 19 23 45 41

05101520253035404550

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0


ConveyanceofLandforConservationCredit

2012 2013 2014 2015 2016

Acres 16,708 14,513 10,683 13,771 8,471

‐

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

AcresConserved

ConveyanceofLandforConservationCredit


CORPORATE‐SUPPORTEDCHILDCARECREDITAGAINSTCIT


BriefDescription: Corporationsprovidingorpayingforlicensedchildcareservicesforemployees’childrenunder12yearsofagemaydeduct30%ofeligibleexpensesfromtheirCITliabilityforthetaxyearinwhichtheexpensesoccur.Thiscredithasathree‐yearcarryforward.Thecreditmaynotexceed$30,000pertaxpayerinanytaxableyear.

StatutoryBasis: 7‐2A‐14NMSA1978

IntendedPurpose: Presumablytoincentivizetheprovisionofchildcarebycorporations.

History: Originallyenactedin1983andamendedin1986and1995.

Evaluation: Thiscredithasbeenusedbythreeorfewertaxpayersinthelastfouryears.



NOTE:Datahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures

0

0.2

0.4

0.6

0.8

1

CIT(thousands)

Corporate‐SupportedChildCareCreditDatahavebeenredacted


DISABLEDPERSONEXEMPTIONFROMMVX


BriefDescription: ApersonisexemptfromtheMVXifthepersonhasadisabilityatthetimethepersonpurchasesavehicleandcanprovetotheMotorVehicleDivisionofTRDoritsagent,thatmodificationshavebeenmadetothevehiclethatare:

(1) duetothatperson'sdisability;and

(2) necessarytoenablethatpersontodrivethatvehicleorbetransportedinthatvehicle.

StatutoryBasis: 7‐14‐6(D)NMSA1978

IntendedPurpose: Presumablytolowerthetaxburdenofpurchasingavehiclebyindividualswithadisabilitywhoneedtomodifytheirvehiclesinordertodrivethem.

History: Section7‐14‐6wasoriginallyenactedin1998andamendedin1990,1994,2004and2007whenSubsectionDwasadded.

Evaluation: Thistaxexpendituremeetsitsintendedpurposeofloweringthetaxburdenofdisabledpersons.


ReliabilityFactor: 3‐InformationonthenumberofhandicapplacardswascollectedfromTRD’sinternaldatabase.AccordingtotheBureauofTransportationStatistics,2.3%ofdisabledpeoplehaveaspeciallymodifiedvehicleintheirhousehold.Thenationalaveragepricesofnewandusedvehicleswerecollectedfortheyearsof2008through2015.AccordingtotheUniversityofMichiganTransportationResearchInstitute,in2011oneoutof19.7driversboughtaneworusedvehicle.Thetotalnumberofhandicapplacardswasmultipliedbytheratioofthosewithspeciallymodifiedvehicles,thendividedby19.7andthenmultipliedbytheaveragepriceofanewandusedvehicle.TheresultingdollaramountwasmultipliedbytheMVXrateof3%.Thisestimatehaschangedsignificantlyfrompreviousyearswithabetterestimateofthepercentageofvehicleswhichqualify.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

MotorVehicle $46.7 $38.5 $45.8 $45.7 $58.9 $51.0

$‐

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0


DisabledPersonExemption


DISABLEDSTREETVENDORSEXEMPTIONFROMGRT


BriefDescription: ReceiptsofdisabledstreetvendorsfromthesaleofgoodsareexemptfromGRT.


IntendedPurpose: Presumably,thisexemptionisintendedtoeliminatetheburdenoffilingCRSreturnsondisabledstreetvendors.


Evaluation: Thecompliancerateofthedisabledvendors,priortotheenactmentoftheexemption,wouldbeexpectedtobeextremelylow,resultinginaminimaleffectivelossofrevenue.


ReliabilityFactor: 4‐Nodataareavailabletoestimatethefiscalimpactofthisexemption.



DOH‐LICENSEDHOSPITALSCREDITAGAINSTGRT


BriefDescription: CertainhospitalslicensedbytheDOHmayclaimacreditagainstGRT,escalatingfromaslittleas0.755%startingJuly1,2007,toasmuchas5%afterJuly1,2011,dependinginpartonwhetherthehospitalislocatedinamunicipalityorinanunincorporatedareaofacounty.


IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenforprofithospitalsandnot‐for‐profithospitalswhoareexemptfromGRT.

History: Originallyenactedin2007;phased‐inthecreditoverfiveyears.

Evaluation: ThedecreaseofthiscreditinFY2016iscausedbyaflurryofapplicationsforrefundofotherrelatedhealthcaredeductions(7‐9‐93and7‐9‐77.1)resultingfromaHearingOfficer’sdecisionandorderknownasthe“HealthSouth”decision.TheHealthSouthdecisionruledthat,contrarytolongstandingTRDregulations,for‐profithospitalscouldclaimthedeductionunderSection7‐9‐93NMSA1978forservicesprovidedbyhealthcarepractitionersatthosefacilities.ItalsoindicatedthatTRDconcededthatfor‐profithospitalscouldclaimthedeductionunderSection7‐9‐77.1NSMA1978forhealthcareserviceswhenthepaymentsforthoseservicescamefromspecifiedfederalsources.Recentlegislativechangesthattookplaceduringthe20162ndSpecialSessionreversesthisdecisionandprecludesfor‐profithospitalsfromclaimingthesedeductions.However,theDOH‐licensedhospitalcreditunderSection7‐9‐96.1NMSA1978allowsforprofithospitalstoclaimacreditagainstGRTliabilityonreceiptsthatarenotdeductibleunderotherprovisionsoflaw.

Inadditiontothe“HealthSoutheffect”andtoamuchlesserdegree,TRD’srecentenhancementsoftax‐creditaccountingprocedureswithintheAuditandComplianceandRevenueProcessingDivisionshavecauseddifferencesbetweentheamountsofthiscreditreportedinthisbookandpreviousversions.However,thedatapresentedhereisthemostaccurateavailabletodate.




FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $8,874.5 $11,125.6 $13,886.9 $11,640.3 $14,299.7 $11,071.9

$‐

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

$16,000.0

GRT(thousands)

DOH‐LicensedHospitalsCredit


DOH‐LICENSEDHOSPITALSFIFTYPERCENTGRTDEDUCTION


BriefDescription: 50%ofthereceiptsofhospitalslicensedbytheDOHaredeductiblefromgrossreceipts.

Thisdeductionmaybeappliedonlytothetaxablegrossreceiptsremainingafterallotherappropriatedeductionshavebeentaken.


IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenforprofithospitalsandnot‐for‐profithospitalswhoareexemptfromGRT.


Evaluation: TheeconomicsubsidyprovidedbythisdeductionagainstgrossreceiptsisasocialpolicydecisiontakentoreducethetotalcostbornebyNewMexicansforeligiblehospitalcare.


ReliabilityFactor: 2‐ThisestimateusesGRTreportedbytaxpayersclassifiedinNAICSsector622—Hospitals;assumesthatthosetaxpayersareproperlyclassifiedandhaveproperlyappliedthedeductionafterallotherapplicabledeductions.Inthe2015TaxExpenditureReport,a100percentdeduction,insteadofa50percentdeductionwasreported.Thishasbeencorrectedinallyears.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $23,838.0 $21,634.0 $20,706.0 $20,184.0 $21,565.0 $14,613.0

$‐

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0


DOH‐LicensedHospitalsDeduction


EDUCATIONTRUSTFUNDPAYMENTDEDUCTIONFROMPIT


BriefDescription: AtaxpayermayclaimadeductionfromnetincomeinanamountequaltothepaymentsmadebythetaxpayerintotheEducationTrustFundpursuanttoacollegeinvestmentagreementorprepaidtuitioncontractundertheEducationTrustActinthetaxableyearforwhichthedeductionisbeingclaimed.


IntendedPurpose: Presumablytoincentivizesavingforcollege.


Evaluation: WhiletherewasaslightdipinthenumberandvalueofclaimsinFY2010fromFY2009(showninthe2014TaxExpenditureReport),likelyassociatedwiththeoverallhealthoftheeconomy,thedeductionappearstobeincentivizingsomesavingsforcollege.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $918.1 $1,022.2 $1,072.6 $1,070.9 $1,249.5

Claims 3,744 3,966 3,991 4,101 4,339

‐5001,0001,5002,0002,5003,0003,5004,0004,5005,000

$‐

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0

PIT(thousands)

EducationTrustFundPaymentDeduction


ELECTRICTRANSMISSIONANDSTORAGEFACILITIESGRTANDCOMPENSATINGTAXDEDUCTION


BriefDescription: ReceiptsfromsellingequipmenttotheNewMexicoRenewableEnergyTransmissionAuthority(“RETA”)oranagentorlesseeoftheauthorityaredeductiblefromgrossreceiptsiftheequipmentisinstalledaspartofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthority,pursuanttotheNewMexicoRenewableEnergyTransmissionAuthorityAct,aredeductiblefromgrossreceipts.

ThevalueofequipmentinstalledaspartofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthoritypursuanttotheNewMexicoRenewableEnergyTransmissionAuthorityAct,isdeductibleincomputingthecompensatingtaxdue.

StatutoryBasis: 7‐9‐101and7‐9‐102NMSA1978

IntendedPurpose: PresumablytoencouragethedevelopmentofrenewableenergytransmissioninfrastructureinNewMexico.

History: Bothdeductionswereoriginallyenactedin2007aspartoflegislationthatenactedtheNewMexicoRenewableEnergyTransmissionAuthorityAct.

Evaluation: AccordingtoRETA’s2016annualreport,RETAannouncedtheycouldrecommenceoperationsasaresultoffundingbyCleanLineEnergy.Infact,thefundsthatCleanLineEnergywillprovidetoRETAwillfullyfundtheiroperations,notonlytheportionpertainingtoCleanLineEnergy’sproject.TheprojectprovidesfundingtoRETAintheamountof$30,000topartiallyassigntheright‐of‐wayagreementithasenteredintowithoneofthepueblos.

Recommendations: TRDbelievesRETAshouldpresenttoRSTPand/orLFConthestatusoftheircurrentandplannedoperationsasthisandotherRETA‐baseddeductionshaveshownverylittleutilizationinrecentyears.

ReliabilityFactor: 2‐The2016annualreportfromRETAdoesnotindicatefurtherbondissuanceorthatRETAhasmadeanyqualifiedexpendituresasofFY2016.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CompTax $‐ $‐ $‐ $‐ $‐ $‐

GRT $3,250.0 $‐ $‐ $‐ $‐ $‐

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0


ElectricTransmissionandStorageFacilitiesDeduction


ELECTRICTRANSMISSIONANDSTORAGEFACILITIESSERVICESGRTDEDUCTION


BriefDescription: ReceiptsfromprovidingservicestotheNewMexicoRETAoranagentorlesseeofRETAfortheplanning,installation,repair,maintenanceoroperationofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthoritypursuanttotheRETAAct,aredeductiblefromgrossreceipts.


IntendedPurpose: Presumably,thedeductionisintendedtoencouragethedevelopmentofrenewableenergytransmissioninfrastructureinNewMexico.

History: Originallyenactedin2007aspartoflegislationthatenactedtheNewMexicoRenewableEnergyTransmissionAuthorityAct.

Evaluation: RETAhasreportedexpendituresforplanningandother“governmentalactivities.”Presumably,thiswillleadtoqualifiedexpendituresfortheotherrelateddeductions.

Recommendations: TRDbelievesRETAshouldpresenttoRSTPand/orLFConthestatusoftheircurrentandplannedoperationsasthisandotherRETA‐baseddeductionshaveshownverylittleutilizationinrecentyears.

ReliabilityFactor: 2‐RETA’sannualauditreportslistexpendituresforplanninganddevelopmentservices.Allexpenditures,excludingpersonalservicesandbenefits,areassumedtobeeligibleforthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $11.0 $27.0 $6.0 $6.0 $5.0 $6.0

$‐

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0


ElectricTransmissionandStorageFacilitiesServicesDeduction


ELECTRICITYCONVERSIONGRTDEDUCTION


BriefDescription: Receiptsfromthetransmissionofelectricitywherevoltagesourceconversiontechnologyisemployedtoprovidesuchservices,andfromancillaryservices,aredeductiblefromgrossreceipts.

ThisdeductionworksintandemwiththeelectricityexchangedeductionprovidedinSection7‐9‐103.2NMSA1978.


IntendedPurpose: PresumablythisdeductionisintendedtoencouragebusinessesusingvoltagesourceconversiontechnologytolocateinNewMexico.


Evaluation: AccordingtotheTresAmigaswebsite,theU.S.ishometovastquantitiesofcleanenergyresources—wind,solar,geothermal,andhydropower—,yetitlacksamoderninterstatetransmissiongridtodelivercarbon‐freeelectricitytocustomersinhighlypopulatedareasofthecountry.Voltagesourceconversionisanemergingtechnology.In2015thecompanyannouncedthatitwasplanningtoinvest$500milliononafirst‐of‐itskindprojectinClovisthatwouldconnectthecountry’sthreedisparatepowergrids.InNovemberof2016TresAmigas,LLCannouncedisdownsizingitsplansforanelectricsuperstationcenteredinthestate,butit’sstillpursuingawaytohelpmovepoweracrosstheU.S.Thenewstrategyincludesalinkbetweenthenation’seasternandwesterngridsusingacapacityofapproximately200megawatts,not750MWasonceplanned.TresAmigasalsomaypursueatietoTexas’mainpowergrid,butitisnotapriorityatthistime.


ReliabilityFactor: 1‐TherearecurrentlynoknownfacilitiesutilizingthistechnologyinNew Mexico.



ELECTRICITYEXCHANGEGRTDEDUCTION


BriefDescription: Receiptsfromthetransactionandexchangeofelectricpower,asapartofthetransmissionofelectricitywherevoltagesourceconversiontechnologyisemployedtoprovidesuchservicesandfromancillaryservices,aredeductiblefromgrossreceipts.

ThisdeductionworksintandemwiththeelectricityconversiondeductionprovidedinSection7‐9‐103.1NMSA1978.


IntendedPurpose: PresumablytoencouragethelocationofelectricityexchangesinNewMexico.


Evaluation: AccordingtotheTresAmigaswebsite,theU.S.ishometovastquantitiesofcleanenergyresources–wind,solar,geothermal,andhydropower,yetitlacksamoderninterstatetransmissiongridtodelivercarbon‐freeelectricitytocustomersinhighlypopulatedareasofthecountry.Voltagesourceconversionisanemergingtechnology.Accordingtothecompany’swebsite,TresAmigas,LLCisplanningtoinvest$500milliononafirst‐of‐itskindprojectinClovisthatwillconnectthecountry’sthreedisparatepowergrids.Thecompany,basedinSantaFenow,willbemovingtoAlbuquerquetoruntheTresAmigassuperstationoncethefacilityisupandrunning.


ReliabilityFactor: 1‐TherearecurrentlynoelectricityexchangesutilizingvoltagesourceconversiontechnologyinNewMexico.



ELECTRONICIDREADERCREDITAGAINSTPITANDCIT


BriefDescription: Ataxpayerlicensedtosellcigarettes,othertobaccoproducts,oralcoholicbeveragesmayclaimaone‐timecreditofupto$300againstPITandCITforthepurchaseofelectroniccard‐readingequipmentforageverification.Thecreditisallowedforeachbusinesslocationwherethebusinessinstallstheequipment.


IntendedPurpose: Presumablytoincentivizetheuseoftheequipmentnecessarytoelectronicallyverifytheageofpurchasersoftobaccoandalcoholbysubsidizingitscost.


Evaluation: Thiscreditisseverelyunderused.Oneplausibleexplanationforthisisthatthevalueofthecreditistoolowwhencomparedtothecostoftheequipment.Thereisalsoadistinctpossibilitythatknowledgeintheindustryabouttheavailabilityofthecreditislacking.

Recommendations: Thiscreditshouldbere‐evaluated,takingintoaccountinputfromindustrystakeholders,orberepealedasineffectiveandunused.Industrychangeswithrespecttoelectronicageverificationequipmentandsystemsandwellasindustrysaturationshouldbeconsidered.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

CITExpenditures $0.00 $0.00 $0.00 $0.00 $0.00

PITExpenditures $0.00 $0.30 $0.00 $0.00 $0.00

$0.0$0.1$0.2$0.3$0.4$0.5$0.6$0.7$0.8$0.9$1.0


ElectronicIDReaderCredit


EXCESSOFELDERLYTAXPAYERSMAXIMUMPROPERTYTAXLIABILITYREBATEFROMPIT


BriefDescription: Taxpayerswhoare65andoldermayclaimaPITrebatefortheamountoftheirpropertytaxthatexceedstheirmaximumliability(rangingfrom$20to$300dependingonthetaxpayer’smodifiedgrossincome).Notaxrebateshallbeallowedtoanytaxpayerwhosemodifiedgrossincomeexceeds$16,000unlessthetaxpayer’sprincipalplaceofresidenceisinacountythathasineffectforthetaxableyear,aresolutionauthorizinganincreasetoa$25,000grossincomecap.


IntendedPurpose: Presumablytopartiallyoffsetthepropertytaxcostsfortaxpayerswhoareoftenonfixedincome.


Evaluation: AccordingtotheU.S.Census,thenumberofpeopleover65whoareinthelaborforceisincreasing.Bycontinuingtowork,thelikelihoodisthattheirincomeexceedsthestatutorythresholdsothattheynolongerqualifyforthisrebate.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $3,359.8 $3,429.2 $3,372.2 $3,375.6 $3,374.3

Claims 17,233 17,423 16,913 16,823 16,552

16,000

16,200

16,400

16,600

16,800

17,000

17,200

17,400

17,600

$3,320.0

$3,340.0

$3,360.0

$3,380.0

$3,400.0

$3,420.0

$3,440.0

PIT(thousands)

ExcessofElderlyTaxpayersMaximumPropertyTaxLiabilityRebate


FEESFROMSOCIALORGANIZATIONSEXEMPTIONFROMGRT


BriefDescription: Receiptsfromduesandregistrationfeesofnonprofitsocial,fraternal,political,trade,labororprofessionalorganizationsandbusinessleagues,areexemptfromGRT.


IntendedPurpose: Presumablytoreducethetaxburdenofcertainnonprofitentities.


Evaluation: Withnodirectdata,aproperevaluationisdifficult.


ReliabilityFactor: 4–Therearenodirectdatatoestimatethisexemption.TheNationalCenterforCharitableStatisticsreportsthatin2012,312registered“other”publiccharities,includingchambersofcommerce,fraternalorganizationsandcivicleaguesreportedabout$1.1billionintotalrevenuesinNewMexicoovertheprior24months.Assumingthat10%isfromdues,theestimatedexemptionisabout$110million.TheexemptionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost,resultinginlostrevenueofabout$7.6millionovertwoyears.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $3,500.0 $3,500.0 $3,600.0 $3,600.0 $3,600.0 $3,800.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0


FeesfromSocialOrganizationsExemption


FILMANDTELEVISIONCREDITAGAINSTPITANDCIT


BriefDescription: ThefilmproductiontaxcreditappliesonlytofilmproductioncompaniesthatcommenceprincipalphotographypriortoJanuary1,2016.AcreditagainstPITorCITisavailablefor25%ofdirectproductionandpostproductionexpendituresmadeinNewMexicothataresubjecttotaxationbytheStateofNewMexicoanddirectlyattributabletotheproductionofafilmorcommercialaudiovisualproduct.

Anadditional5%isavailablefordirectproductionexpendituresforTVpilotsandserieswithatleastsixepisodesinasingleseasonandabudgetofatleast$50,000perepisode.Theadditional5%alsoappliestodirectproductionexpendituresthataredirectlyattributabletothewagesandfringebenefitspaidtoaNewMexicoresidentdirectlyemployedinanindustrycrewposition,excludingaperformingartist,onaproductionwithatotalbudgetof:

(1) notmorethan$30,000,000thatshootsatleasttenprincipalphotographydaysataqualifiedproductionfacilityinNewMexico;or

(2) $30,000,000ormorethatshootsatleastfifteenprincipalphotographydaysataqualifiedproductionfacilityinNewMexico.

Atieredscheduleofpaymentsisprovidedbasedonthesizeofthefilmtaxcredit.Forcreditsunder$2million,thecreditispaidimmediatelyuponauthorization.Forcreditsbetween$2millionand$5million,50%ofthepaymentispaidimmediatelyuponauthorization;theother50%ispaidtwelvemonthsfollowingthatdate.Forcreditsover$5million,therefundwillbepaidinthreeequalinstallments;oneispaidimmediatelyuponauthorization,oneispaidtheyearfollowing,andthelastispaidtwoyearsfollowing.

Anaggregateannualcaplimitspayoutsofthefilmproductiontaxcreditto$50millionacrossbothPITandCITprogramsinanyfiscalyear.

StatutoryBasis: 7‐2F‐1etseq.NMSA1978

IntendedPurposes: Thepurposesandgoalsofthefilmproductiontaxcreditareto:

1. establishthefilmindustryasapermanentcomponentoftheeconomicbaseofNewMexico;

2. developapooloftrainedprofessionalsandbusinessesinNewMexicotosupplyandsupportthefilmindustryinthestate;

3. increaseemploymentofNewMexicoresidents;


4. improvetheeconomicsuccessofexistingbusinessesinNewMexico;and

5. developtheinfrastructureinthestatenecessaryforathrivingfilmindustry.

History: Originallyenactedin2002andamendedin2003,2005,2006,2007,2011,2013,2015and2016.

The2011amendmentaddeda$50millioncap,providetrackingrequirements,requirefilmproductioncompaniestosubmittheapplication/claimwithinoneyear,andrequiremandatoryincometaxwithholdingonnonresidentactors.

The2013amendmentallowedanadditional5%tobeaddedtothecalculationforthefilmproductiontaxcreditfortelevisionshowssubjecttocertainrequirements(the“BreakingBad”provision);alsoallowsforanyamountofannualfilmcreditthatisunusedinFiscalYears2013‐2015underthe$50millioncap—uptoamaximumof$10million—tobecarriedforwardandaddedintothesubsequentfiscalyear’scap;inanyyearwherethe$50millioncapisnotreached,ifthereareamountsthatwouldbepaidinasubsequentyearunderthemulti‐yearprovisionsofthefilmcredit,thosesubsequentyearamountsmaybepaidinthecurrentyearuptothe$50millioncap;providesmorespecificrequirementsforwithholdingtaxesrelatedtoservicesprovidedbyartistsunderthe“directproductionexpenditures”provisionsofthecredit,anditprovidesforadefinitionof“qualifiedproductionfacility”andclarifiestaxobligationsofnon‐residentvendorservices.

In2015,thefilmandtelevisiontaxcreditappliestofilmproductionandaddscreditsfortelevisionpilotsandseries,qualifiedproductionfacilities,nonresidentindustrycrews,limitationonpaymentsforperformingartistsandaddsrequirementstocontractwithcertainvendors.Anadditionalamendmentaddsaprovisionforafilmproductioncompanythatiseligibletoreceiveafilmproductioncredit,toassignpaymentofalloraportionofthecredittoeitherathird‐partyfinancialinstitutionoranotherauthorizedthirdparty.The2015amendmenthasnoimpactonthetimeperiodscoveredbythisreport.

Evaluation: TheFilmDivisionhadasecondstraightrecord‐breakingyear,injectingnearly$390millionintotheeconomy,shatteringlastfiscalyear’srecordbyalmost$100million.Withsix(6)majortelevisionseries:(Midnight,Texas(NBCpilot),LongmireSeason5(Netflix),PreacherSeason1(AMC),FromDuskTillDawnSeason3(ElRey/Netflix),TheNightShiftSeason3(NBC)andGodlessSeason1(Netflix),andsix(6)features(GraniteMountain,Hostiles,AnIdealHome,Juarez,CowboyDrifterandIAmThat)inproductionwiththenumberofworkerdaystotaling260,307.


FY16PerformanceMeasures Target Year‐EndTotalNumberoffilmandmediaworkerdays 190,000 260,307Directspendingbyfilmindustryproductionsinmillions 200 387.2Numberofmajorfilmproductionsovers$1MmadeinNM 19 30PerformanceMeasures FY12* FY13 FY14 FY15 FY16

DirectSpendintoNMEconomy

*wasnotaperformancemeasureinFY2012

$213.70 $162.10 $288.60 $387.20

QualifyingSpend** $224.60 $233.50 $196.50 $343.10 $467.00

NumberofProjectsover$1M(totalbudget)

14 21 18 25 30

WorkerDays(crewsizexdaysemployed)

143,046 216,461 189,782 279,458 260,307

**approximatedviaNMFilmOfficeinitialregistrationestimates

Recommendations: TherewouldbesignificantfiscalbenefittotheStateifpaymentswerenotaccelerated.Themechanicsofthisprogramresultintaxpayersapplyingforthebenefitbyamendingreturns.Inrecentyearspaymentshavebeenaccelerated;infutureyearsTRDexpectstheaggregatecaptobereachedwithoutacceleratingpayments.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $96,192.3 $9,494.5 $50,000.0 $50,000.0 $50,000.0 $50,000.0

Claims 56 58 59 81 58 74

‐

1020304050

60708090

$‐

$20,000.0

$40,000.0

$60,000.0

$80,000.0

$100,000.0

$120,000.0


FilmProductionCredit


FUELFORSPACEVEHICLESEXEMPTIONFROMGRTANDCOMPENSATINGTAX


BriefDescription: Receiptsfromthesaleandtheuseoffuel,oxidizer,orasubstancethatcombinesfuelandoxidizertopropelspacevehiclesortooperatespacevehiclelaunchersareexemptfromGRTandcompensatingtax.


IntendedPurpose: PresumablytoincentivizeoperationsatSpaceportAmerica.

History: Originallyenactedin2003aspartoflegislationexemptinganumberofspace‐relatedactivitiesfromGRTandcompensatingtax

Evaluation: FrompubliclyavailableinformationandthatpublishedbytheSpaceport,althoughnolaunchesrequiringrefuelingon‐siteappeartobecurrentlyscheduledatSpaceportAmerica,twooperatorswhichwouldrequiresuchactivitieshavemadesignificantinvestmentsatthesiteandtwoothershavesignedpartnershipswiththeauthority,includingonecompanywhichrelocatedtheirheadquarterstoNewMexico.


ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.



GEOTHERMALGROUND‐COUPLEDHEATPUMPCREDITAGAINSTPITANDCIT


BriefDescription: AtaxpayerwhopurchasesandinstallsafterJanuary1,2010butbeforeDecember31,2020ageothermalground‐coupledheatpumpinaresidence,business,oragriculturalenterpriseinNewMexicomayclaimacreditupto30%ofthepurchaseandinstallationcostsagainstPITorCITliability.

A“geothermalground‐coupledheatpump”isadevicethatprovidesspaceorwaterheatingorcoolingviagroundwaterorwatercirculatingthroughtheground.Thetotalgeothermalground‐coupledheatpumptaxcreditallowedtoataxpayershallnotexceedninethousanddollars($9,000).Thedepartmentmayallowamaximumannualaggregateoftwomilliondollars($2,000,000)ingeothermalground‐coupledheatpumptaxcredits.


IntendedPurpose: Presumablytosubsidizethegeothermalground‐coupledheatpumpindustry.


Evaluation: None.

Recommendations: Itmaybeworthexaminingthe$9,000cap,especiallyinthecaseofmulti‐familyhousing,wheremorethanonegeothermalheatpumpdeviceisinstalled.Expandingthecapmaypromotebetterutilizationoftheavailablecapspace.Aspartofthatreview,however,considerationoftheenergycostsavingsthatresultfromthesedevicesshouldbeundertakentobetterunderstandthebenefitstooccupants,whetherrentersorhomeowners.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $67.0 $115.9 $238.5 $544.3 $515.6

Claims 15 33 67 172 187

‐20406080100120140160180200

$‐

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0


GeothermalGround‐CoupledHeatPumpCredit


GOODSANDSERVICESFORTHEDODRELATEDTODIRECTEDENERGYANDSATELLITESGRTDEDUCTION


BriefDescription: PriortoJanuary1,2021,receiptsfromthesalebyaqualifiedcontractorofqualifiedresearchanddevelopmentservicesandqualifieddirectedenergyandsatellite‐relatedinputs,maybedeductedfromgrossreceiptswhensoldpursuanttoacontractwiththeU.S.DepartmentofDefense.

AtaxpayerallowedadeductionpursuanttothissectionshallreporttheamountofthedeductionseparatelyinamannerrequiredbyTRD.

Definitions:

(1)"directedenergy"meansasystem,includingrelatedservices,thatenablestheuseofthefrequencyspectrum,includingradiowaves,lightandx‐rays;

(2)"inputs"meanssystems,subsystems,components,prototypesanddemonstratorsorproductsandservicesinvolvingoptics,photonics,electronics,advancedmaterials,nanoelectromechanicalandmicroelectromechanicalsystems,fabricationmaterialsandtestevaluationandcomputercontrolsystemsrelatedtodirectedenergyorsatellites.


IntendedPurpose: Topromotenewandsophisticatedtechnology,enhancetheviabilityofdirectedenergyandsatelliteprojects,attractnewprojectsandemployerstoNewMexicoandincreasehigh‐technologyemploymentopportunitiesinNewMexico.


Evaluation: Itistooearlytotellifthisdeductionhasfulfilledthepurposeforwhichitwascreated.



FiscalImpact: NOTE:DatainFY2016havebeenredactedduetofewerthan3taxpayerstakingthededuction.Noclaimsotheryearsasthecreditisnew.

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $‐ $‐ $‐ $‐ $‐

Claims ‐ ‐ ‐ ‐ ‐

‐11

$‐$0.5$1.0

Expenditures

(thousands) DirectedEnergyandSatellitesDeduction


HEALTHCAREPRACTITIONERSERVICESGRTDEDUCTIONANDHOLDHARMLESSDISTRIBUTION


BriefDescription: ReceiptsoflicensedhealthcarepractitionersfrompaymentsbymanagedhealthcareprovidersorbyhealthcareinsurersforcommercialcontractservicesorbyMedicarePartCservicesprovidedbyahealthcarepractitioner,aredeductiblefromgrossreceipts.

Thedeductionisrequiredtobeseparatelystatedbythetaxpayer.Duringthe20162ndspecialsession,Section7‐1‐69.2wascreatedtoaddapenaltyforincorrectlyfilingforthisandforthefood(holdharmless)deductionsinsteadoftakingotherexemptionsordeductionswhichmustbetakenfirst,resultinginaholdharmlessdistribution.Thepenaltyisequalto20%ofthevalueoftheholdharmlessdistributionresultingfromtheincorrectdeduction.

EnactedwiththeoriginatinglegislationwereprovisionsintheTaxAdministrationActthatrevenuesofmunicipalandcountygovernmentswouldbeheldharmlessfromthededuction.

StatutoryBasis: 7‐9‐93,7‐1‐6.46,and7‐1‐6.47NMSA1978

IntendedPurpose: Presumablytokeephealthcareprovidersinthestate.

History: Allthreesectionswereoriginallyenactedin2004andamendedin2006and2007.Sections7‐1‐6.46and7‐1‐6.47NMSA1978werealsoamendedin2013.Section7‐9‐93wasamendedduringthe20162ndspecialsessiontoreinstatethepresumedoriginalintentionofthedeductionbyrestrictingittohealthcarepractitionersonlyandnothospitals.

Evaluation: Becauseoftheholdharmlessprovisionandthelossoftherevenuewhichhasbeenmadeupthroughothertaxburdens,thisreductioncomesatasignificantcosttoboththeGeneralFundandtheverytaxpayersitisbenefitting.

ThesignificantincreaseofthiscreditinFY2016iscausedbyaflurryofapplicationsforrefundresultingfromaHearingOfficer’sdecisionandorderknownasthe“HealthSouth”decision.TheHealthSouthdecisionruledthat,contrarytolongstandingTRDregulations,for‐profithospitalscouldclaimthedeductionunderSection7‐9‐93NMSA1978forservicesprovidedbyhealthcarepractitionersatthosefacilities.ItalsoindicatedthatTRDconcededthatfor‐profithospitalscouldclaimthedeductionunderSection7‐9‐77.1NSMA1978forhealthcareserviceswhenthepaymentsforthoseservicescamefromspecifiedfederalsources.Recentlegislativechangesthattookplaceduringthe20161stSpecialSessionreversesthisdecisionandprecludesfor‐profithospitalsfromclaimingthesedeductions.However,theDOH‐licensedhospitalcreditunderSection7‐9‐96.1NMSA1978allowsfor


profithospitalstoclaimacreditagainstGRTliabilityonreceiptsthatarenotdeductibleunderotherprovisionsoflaw.


ReliabilityFactor: 1–Thisdeductionisseparatelyreported.Noestimationisrequired.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

HoldHarmless $31,914.0 $34,590.3 $34,687.9 $32,839.9 $31,430.7 $29,884.5

GRT $38,752.2 $42,002.5 $42,044.8 $40,395.1 $38,664.9 $36,427.2

$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000


HealthCarePractitionerServicesDeduction


HEARINGANDVISIONAIDSGRTDEDUCTION


BriefDescription: Receiptsfromthesaleofvisionandhearingaidsorfromfittinganddispensingofthesetypesofaidsaredeductiblefromgrossreceipts.

Definitions:

(1) “visionaids”aredefinedasclosedcircuittelevisionsystems,monoculars,magnificationsystems,speechoutputdevicesorothersystemsspecificallydesignedforusebypersonswithlowvisionorvisualimpairmentandnotnormallyusedbyapersonwhodoesnothavelowvisionorvisualimpairment;

(2) “visualimpairment”isdefinedasacentralvisualacuityof20/200orlessinthebettereyewithuseofacorrectinglens,oralimitationinthefieldsofvisionsothewidestdiameterofvisualfieldsubtendsanangleof20degreesorless;and,

(3) “hearingaids”aredefinedassmallelectronicprescriptiondevicesthatamplifysoundandareusuallyworninorbehindtheearofapersonwithimpairedhearing.


IntendedPurpose: Presumablytobenefitpersonswho,duetomedicalconditions,areinneedofhearingandvisionaids.ThedeductionthenwouldreducethetaxburdenimposedbyGRTandincreasethetaxpayers’disposableincome.


Evaluation: None.





HIGH‐WAGEJOBSCREDITAGAINSTMODIFIEDCOMBINEDTAX


BriefDescription: Eligibleemployerswhocreatehigh‐wagejobsinNewMexicomayapplyforataxcreditagainstGRT(lesslocaloptionGRT),compensatingtax,withholdingtax,E911,andCRStaxdue.

An“eligibleemployer”isanemployerthat:

(1) mademorethan50%ofitssalesofgoodsorservicesproducedinNewMexicotopersonsoutsideNewMexicoduringtheapplicablequalifyingperiod,or

(2) iseligiblefortheJobTrainingIncentiveProgramassistanceadministeredbyEDD.

Theamountofthehighwagejobstaxcredit(“HWJTC”)wouldbeequalto10%ofthequalifyingwagesandbenefitsinaneligiblejobupto$12,000foreachjob.Ifaneligibleemployermeetstherequirements,thereisnoupwardlimitonthepotentialnumberoftotalcreditsclaimed.

StatutoryBasis: 7‐9G‐1NMSA1978

IntendedPurpose: Toprovideanincentiveforurbanandruralbusinessestocreateandfillnewhigh‐wagejobsinNewMexico.


The2013amendmentclarifiedtheapplicationofthehigh‐wagejobstaxcredit;defined“benefits”and“wages”;addedthepurposesection;clarifiedthatthe$12,000limitationappliedperjobperqualifyingperiod;limitedthetimeforwhichataxpayercanapplyforapprovalofthecredittonolaterthan12monthsfollowingtheendofthecalendaryearinwhichthetaxpayer'sfinalqualifyingperiodcloses;closedaloopholewithrespecttomergers,acquisitions,andreorganizations;changedthepopulationthresholdforrural/urbandistinctionfrom40,000to60,000;clarifiedthattheeligibleemployeemustbeemployedinNewMexico;clarifiedthatthegoodsorservicessoldmustbeproducedinNewMexico;addedarequirementthatthetaxpayerbecertifiedbyEDDaseligiblefordevelopmenttrainingprogramassistanceinordertobean“eligibleemployer”;clarifiedthata“newhigh‐wageeconomic‐basedjob”mustbea“new”jobandmustbeinNewMexico;extendedthedeadlinetohiretoJuly1,2020;increasedthewagesthatmustbepaidtoqualifyafterJuly1,2015(from$40,000to$60,000inurbancommunitiesandfrom$28,000to$40,000inruralcommunities).


Theamendmentthattookplaceduringthe20162ndSpecialLegislativesessionchangestheeligibilityrequirementstoqualifyforthecreditandrequiresannualfiling,whereaspre‐amendmentstatuteallowedfilingformultiplequalifyingperiodsatonce.Theamendment’sprimarypurposeistoclosegapsinthestatute’slanguagethatallowedunintendedrecipientstoreceivethecredit.Theamendmentalsoremovedemployeebenefitsfromthecalculationofthecreditvalue.

Evaluation: Becauseofthechangestothelawthatoccurredinthe2013sessionandtheflurryofclaimsthatprecededtheeffectivedateofthosechanges,TRDawardedsignificantamountsofHWJTCclaimsinFY2015andFY2016.TRDeconomists,aspartoftheConsensusRevenueEstimatingGroupanticipatedthatsignificantHWJTCclaimswouldbepaidoutduringFY2015andFY2016asaresultofthe2013flurryofclaims.TRDhasbeenoperatingontheassumptionthatthelawchangesthatwentintoeffectinJune2013wouldresultinareductioninHWJTCclaimsoncethebacklogofclaimsandprotests,whichwerefileddaysbeforetheeffectivedateofthosechanges,clearedlegalandthecourts.Basedonrecentlegislativechangesthattookplaceduring20162ndspeciallegislativesession,TRDestimatestheamountsofHWJTCclaimstodecreasesignificantlystartinginFY2017toanannualbaseof$15million(newapplications)withanestimatedtotalclaimedorpaidamountof$30million.

Recommendations: Eliminatethedeadlinebywhich“newhigh‐wageeconomic‐basedjobs”mustbecreated.Inthealternative,extendthedeadlinetoJuly1,2025.TheamendedeligibleemployerdefinitioncouldbedeemedtoorestrictivebyEDDstandards.Aswritten,thestatutedoesn’tallowforflexibilityincaseeconomicconditionschangeandthestatedesirestoattractadifferenttypeoftaxpayer;thefive‐yearbarforemploymentmaintenanceorcyclicalchangesandthetotalemploymentdropof5%mightbetoorestrictive.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Refunded $9,085.4 $21,023.4 $18,563.9 $45,278.5 $57,218.8 $47,784.0

Withholding $685.6 $1,032.8 $646.9 $1,117.0 $1,355.6 $625.0

CompTax $101.1 $305.2 $726.6 $227.2 $419.7 $337.0

GRT $438.8 $1,635.7 $1,528.5 $2,006.7 $6,924.5 $2,156.0

$‐

$10,000.0

$20,000.0

$30,000.0

$40,000.0

$50,000.0

$60,000.0

$70,000.0

Expenditures(thousands) High‐WageJobsCredit

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Refunded 48 66 76 101 151 110

Withholding 46 59 65 62 51 69

CompTax 31 47 46 49 53 87

GRT 46 70 71 58 93 88

‐50100150200250300350400

Claims

High‐WageJobsTaxCredit


HOSTINGWORLDWIDEWEBSITESGRTDEDUCTION


BriefDescription: Receiptsfrominternetconnectedfacilitiesthatstoredataaredeductiblefromgrossreceipts.Despitethetitle,thestatuteindicatesthatanyfacilitystoringdataandconnectedtotheinternetqualifiesforthisdeduction,notjustweb‐hosting.


IntendedPurpose: PresumablytoincentivizedatacenterstorelocateinNewMexico.


Evaluation: AccordingtoDataCenterResearch’swebsite(datacenterresearch.com),therearecurrently6datacentersoperatinginthestate;4ofthemarelocatedinAlbuquerque,1inSantaFe,and1inTaos.BecausethemajorityofthesecompaniesstartedoperationsinNewMexicoafterthedeductionbecameeffective,itwouldbereasonabletobelievethedeductionhashadapositiveeffect.


ReliabilityFactor: 2‐ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $220.0 $240.0 $290.0 $320.0 $350.0 $350.0

$‐

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0


HostingWorldWideWebSites Deduction


HYBRIDVEHICLEEXEMPTIONFROMMVX


BriefDescription: Gasoline‐electrichybridvehicleswitharangeofatleast27.5milespergallon,ascertifiedbytheU.S.EnvironmentalProtectionAgencyareeligibleforaone‐timeexemptionfromtheMVXatthetimeofissuanceoftheoriginaltitle.

TheexemptionwaseffectivefromJuly1,2004toJune30,2009.

StatutoryBasis: 7‐14‐6(G)NMSA1978

IntendedPurpose: Presumablytoincentivizethepurchaseofgasoline‐electrichybridvehiclesthatreducecarbonemissions.

History: Thesectionasoriginallyenactedin1988andamendedin1990,1994,2004,and2007.

Thissubsectionwasenactedbytheamendmentin2004.

Recommendations: RemovelanguageofSubsectionGfromSection7‐14‐6,asameasureofstatuteclarity.

ReliabilityFactor: 1‐ThisexemptionexpiredonJune30,2009.Sincethen,nohybridvehiclequalifiesfortheexemption.

FiscalImpact: None.


INVESTMENTCREDITAGAINSTGRT,COMPENSATINGTAX,ORWITHHOLDINGTAX


BriefDescription: TheinvestmentcreditisforequipmentownedandintroducedintoNewMexicoforusebyataxpayerinaneworexpandedmanufacturingoperation.

Tobeeligibleforthecredit,untilJune30,2020,thetaxpayermustemployonefull‐timeequivalent(“FTE”)forevery$500,000ofqualifiedequipmentclaimed(upto$30million)andoneFTEforevery$1millionofqualifiedequipmentclaimed(over$30million).AfterJune30,2020,thetaxpayermustemployoneFTEforevery$100,000ofqualifiedequipmentclaimed.

Thecreditmaybeappliedagainstamaximumof85%ofataxpayer’sgrossreceipts,compensating,andwithholdingtaxliability,butmaynotbetakenagainstanylocaloptionGRTimposedbyacountyormunicipality.

Thecreditisrefundableonlyupto$250,000ifthetaxpayer’savailablecreditislessthan$500,000andthesumofthetaxpayer’sgrossreceipts,compensating,andwithholdingtaxdueforthepreviouscalendaryearwaslessthan35%ofthetaxpayer’savailablecreditbutmorethan$10,000.

Thereisnolimitonhowlongthecreditcanbecarriedforward.

StatutoryBasis: 7‐9A‐1etseq.NMSA1978

IntendedPurpose: ToprovideafavorabletaxclimateformanufacturingbusinessesandtopromoteincreasedemploymentinNewMexico.

History: Originallyenactedin1979andamendedin1983,1986,1990,1991,2001,2002,2003,and2009.

Evaluation: EDDreportsthatthankstoincentiveslikethis,thestatehasbeensuccessfulatattractingmanufacturingbusinessesfromkeyindustriessuchasoilandgasproducers,breweriesandwineries.

Recommendations: Establishproceduresforwhenthecreditshouldbeclaimed.Thecreditshouldbeclaimedinconsecutivemonthsoncethecompanystartsclaimingthecredit.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $1,889.2 $1,468.4 $10,147.9 $11,966.1 $3,647.1 $3,147.5

Claims 91 102 203 168 254 361

‐

50

100

150

200

250

300

350

400

$‐

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0


InvestmentTaxCredit


INVESTMENTMANAGEMENTORADVISORYSERVICESGRTDEDUCTION


BriefDescription: Receiptsfromfeesreceivedforperformingmanagementorinvestmentadvisoryservicesforamutualfund,hedgefund,orrealestateinvestmenttrust,aredeductiblefromgrossreceipts.


IntendedPurpose: PresumablytoincentivizefundmanagerstomovetoNewMexico,therebyincreasingincometaxrevenuesanddisposableincomethatwillcirculatethroughtheState’seconomy.


Evaluation: None.


ReliabilityFactor: 4‐TRDdoesnothaveanydirectdatatoestimatethisdeduction.Becausetheservicesaredeductibleonlywhenperformedforspecifictypesofentities,industrysectordatacannotbeused.Thisestimateshouldbeunderstoodtorepresenttheestimatedgeneralmagnitudeofthededuction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $130.0 $135.0 $150.0 $155.0 $140.0 $140.0

$‐

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0


InvestmentManagementorAdvisoryServicesDeduction


JETFUELFIFTY‐FIVEPERCENTGRTANDCOMPENSATINGTAXDEDUCTION


BriefDescription: FromJuly1,2003throughJune30,2017,55%ofthereceiptsfromthesalefuelspeciallypreparedandsoldforuseinturboproporjet‐typeengines,asdeterminedbyTRD,aredeductiblefromgrossreceipts.

FromJuly1,2003throughJune30,2017,55%ofthevalueofthefuelspeciallypreparedandsoldforuseinturboproporjet‐typeenginesasdeterminedbyTRD,maybedeductedincomputingcompensatingtax.

AfterJune30,2017,theamountofthedeductionsisreducedto40%ofthereceiptsfromthesaleorvalueofthefuel.


IntendedPurpose: PresumablytoincentivizeroutingofairtrafficthroughNewMexicobyreducingtheeffectivecostofrefuelinginNewMexico.

History: Originallyenactedin1993andamendedin2003,2006,and2011.

The2011amendmentextendedthe55%deductionuntil2017.

Evaluation: Forthelastseveralyears,totaldeparturesfromtheAlbuquerqueSunporthavebeendecreasing,about9%peryear.TherepealoftheWrightamendmentresultedinalargerdecreaseofabout12%forFY2015.However,theSunportisnottheonlyuserofjetfueland,asindicatedbelow,EIAshowsgenerallyincreasingjetfuelusageinthestate.ThereforeitisunclearifthisdeductionisexertinganyinfluenceonpurchasesofjetfuelinNewMexico.


ReliabilityFactor: 3‐EIA’spublishedstatewideexpendituresonjetfuelwereusedforthisestimate.80%isassumedtobesubjecttoGRTatthestatewideaveragetaxrate;theremainderisassumedtofallundercompensatingtax.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $5,581.0 $4,500.0 $5,200.0 $6,000.0 $6,800.0 $6,800.0

$‐

$2,000.0

$4,000.0

$6,000.0

$8,000.0

CombinedTaxes

(thousands)

JetFuelDeduction


JOBMENTORSHIPCREDITAGAINSTPITANDCIT


BriefDescription: Businesseshiringqualifiedstudentsinaschool‐sanctioned,career‐preparationeducationprogrammayclaimacreditagainstPITandCIT.QualifyingbusinessesmustemploystudentsattendinganaccreditedNewMexicosecondaryschoolfull‐time.

Creditsarefor50%ofthegrosswagespaid,subjecttolimitations.Innoeventshallataxpayerclaimacreditinexcessoftwelvethousanddollars($12,000)inanytaxableyear.


IntendedPurpose: ToencourageNewMexicobusinessestohireyouthparticipatingincareerpreparationeducationprograms.


Evaluation: Withverylittleactivityinthiscredit,thereiscausetobeconcernedaboutwhetherthecreditisservingitsintendedpurpose.

Recommendations: Whilethepurposeofthecreditispositiveintheory,itdoesnotappeartobeworkingasanincentivetobusinessesintheirhiringofqualifiedstudents.Itisworthmakingaconcertedoutreachefforttoensurethatbusinessesareawareofthiscredit.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $9.4 $15.1 $17.8 $13.1

Claims 3 5 6 6

0

1

2

3

4

5

6

7

$‐$2.0$4.0$6.0$8.0$10.0$12.0$14.0$16.0$18.0$20.0


JobMentorshipProgramsCreditDatahavebeenredacted


LABORATORYPARTNERSHIPWITHSMALLBUSINESSCREDITAGAINSTGRT


BriefDescription: AnationallaboratorythatofferscertaintypesofeligibleassistancetoindividualsmallbusinessesinNewMexico,andincursexpensesfordoingso,maytakeacreditagainstthestateportionofGRTofupto$10,000perbusiness($20,000perbusinessinaruralarea).Thetaxcreditstakenbyanindividualnationallaboratoryshallnotexceed$2,400,000inagivencalendaryear.

StatutoryBasis: 7‐9E‐1etseq.NMSA1978

IntendedPurpose: TobringthetechnologyandexpertiseofthenationallaboratoriestosmallbusinessesinNewMexicotopromoteeconomicdevelopmentinthestate,withanemphasisonruralareas.


Evaluation: SandiaandLosAlamosNationalLaboratories,throughNewMexicoSmallBusinessAssistance(“NMSBA”),fileanannualreportwiththeappropriatelegislativecommittee,documentingvariousprogrammetrics.NMSBAreportsthatsinceinception,theprogramhasassisted2,495smallbusinesseswith4,863jobscreatedandretained.ThefullreportpublishedinAprilof2016canbeobtainedthroughnmsbaprogram.org.Becausethecreditmaximumsarebasedonacalendaryear,itwouldseemthecapwasexceededinFY2014asshownonthechartbelow.Thisisnotthecaseastheamountsarereportedonafiscalyearbasis.



NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedataispublishedindependentlybybothtaxpayers.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $2,823.5 $4,383.9 $4,544.2 $5,065.4 $4,618.2 $4,721.7

Claims 7 5 9 4 6 5

0

2

4

6

8

10

$‐$1,000.0$2,000.0$3,000.0$4,000.0$5,000.0$6,000.0

GRT(thousands)

LaboratoryPartnershipwithSmallBusinessCredit


LOAN‐RELATEDCOSTSGRTDEDUCTION


BriefDescription: Receiptsfromchargesmadeinconnectionwiththeorigination,making,orassumptionofaloanorfromchargesmadeforhandlingloanpaymentsaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoreducethecostsofborrowing.


Evaluation: None.


ReliabilityFactor: TRDdoesnothaveanydirectdatatoestimatethisdeduction.



LOCOMOTIVEENGINEFUELGRTANDCOMPENSATINGTAXDEDUCTION


BriefDescription: Receiptsfromthesaleoffueltoacommoncarriertobeloadedorusedinalocomotiveenginearedeductiblefromgrossreceipts.

Thevalueoffueltobeloadedorusedbyacommoncarrierinalocomotiveengineinalocomotiveengineisdeductiblewhencomputingthecompensatingtaxdue.

StatutoryBasis: 7‐9‐110.1and7‐9‐110.2NMSA1978

IntendedPurpose: Toencouragetheconstruction,renovation,maintenanceandoperationofrailroadlocomotiverefuelingfacilitiesandotherrailroadcapitalinvestmentsinNewMexico.

History: Originallyenactedin2011;becameeffectiveJuly1,2013uponcertificationbyEDDthatconstructionhadcommenced.

Evaluation: ConstructionoftheUnionPacific(“UP”)intermodalrampandrefuelingfacilityinSantaTeresawascompletedinDecember2014andhasbeenfullyoperationalsinceAprilofthesameyear.AccordingtoUP’sannualreport,thecompanyhasinvested$350millioninthe2,200‐acrefacilitybetween2011and2014.Thecompanyreportstheyhavecreatedabout1,375constructionjobsoverthe3.5yearsconstructionperiod.AsofJune30,2016,UPreportedcreating434newpermanentsjobs(303UPemployeesand131contractors).BurlingtonNortherSantaFe(“BNSF”)reportsanincreaseof$8millioninoperatingrevenuein2015over2013andinearly2016thecompanyannounceda$100millioncapitalexpenditureplanthatwillinvolvereplacingandupgradingtherailtiesandballastsofthetracksusedinthestate.BNSFreportstheyhavecreated993permanentjobssincethebeginningofoperations.AccordingtotheBorderIndustrialAssociation,SantaTeresaisexperiencingrobusteconomicgrowththankstotherippleeffectassociatedwithincreaseineconomicactivity.


ReliabilityFactor: 2‐TheamountofthisdeductionisseparatelyreporteddirectlybytaxpayerstoEDD.Whiletherewassomeestimationinthetaxpayer’sreports,noestimationisrequiredbyTRD.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CompTax $‐ $‐ $‐ $13,240.0 $19,309.0 $11,400.0

GRT $‐ $‐ $‐ $1,925.0 $3,831.0 $4,600.0

$0.0

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0


LocomotiveEngineFuel Deduction


LOTTERYRETAILERRECEIPTSGRTDEDUCTION


BriefDescription: ReceiptsofalotterygameretailerfromsellingNewMexicolotteryticketsaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoreducethecostoflotteryticketsinanefforttoincreaselotteryticketsales,aportionofwhichgoestotheLotteryScholarshipProgram.


Evaluation: GiventhefundingdifficultiesexperiencedbytheLotteryScholarshipProgram,itcanbeassertedthatthetaxdeductionisnotmeetingitspresumedgoalofincentivizingthepurchaseoflotteryticketsinsufficientamounttofundtheLotteryScholarshipProgram.


ReliabilityFactor: 2–ThecostofthisdeductionwasestimatedusinggrossrevenuespublishedbytheNewMexicoLottery,multipliedbythestatewideaverageGRTrateforeachyear.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $9,300 $9,200 $9,700 $9,350 $9,450 $9,600

$8,900

$9,000

$9,100

$9,200

$9,300

$9,400

$9,500

$9,600

$9,700

$9,800


LotteryRetailerReceiptsDeduction


LOW‐ANDMIDDLE‐INCOMETAXPAYERSEXEMPTIONFROMPIT


BriefDescription: Anindividualmayclaimanexemptionequaltothenumberofexemptionsclaimedontheirfederalreturnmultipliedby$2,500.Theamountoftheexemptionisdeductedfromtheirnetincome.


IntendedPurpose: Presumablytoprovideassistancetothatsegmentofthepopulationwhoseincomeisrelativelylowbyreducingtheirtaxliability.

History: Originallyenactedin2005,andamendedin2007.

The2007amendmentincreasedtheadjustedgrossincomethresholdamountsfortaxpayerseligiblefortheexemption.

Evaluation: Morethan$20millionhasremainedinthepocketsoftaxpayersthroughoutthestate.Giventhatthesavingsrateamongthispopulationisrelativelylow,thereisahighlikelihoodthatthismoneyiscirculatingthroughouttheNewMexicoeconomy.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $10,388.8 $9,956.7 $9,509.0 $9,005.8 $8,790.3

Claims 636,684 627,452 613,557 599,469 586,192

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

$‐

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

PIT(thousands)

Low‐ andMiddle‐IncomePersonsExemption


LOW‐INCOMECOMPREHENSIVETAXREBATEANDPROPERTYTAXREBATE

AGAINSTPIT


BriefDescription: Thisexpenditureconsistsoftwoseparatestatutoryprovisions.Thelow‐incomecomprehensivetaxrebate(“LICTR”)inintendedtopartiallyoffsetthestateandlocalsalestaxespaidbylowincometaxpayers.Itmaybeclaimedbytaxpayerswithamodifiedgrossincomeoflessthan$22,000.Therebateamountisdependentuponmodifiedgrossincomeandthenumberofexemptionsclaimed(itvariesbetween$10and$450).

Thelow‐incomepropertytaxrebateisintendedtopartiallyoffsettheamountofpropertytaxespaidbylowincomeresidents.Itmaybeclaimedbyindividualswith:

(1) aprincipalplaceofresidenceinacountythathasenactedanordinanceauthorizingtherebate(onlyLosAlamosandSantaFeCountieshaveenactedtherequiredordinances),and

(2) modifiedgrossincomeoflessthan$24,000.

Thisrebateiscalculatedasapercentageofthetaxpayer'spropertytaxliability;thepercentagedependsuponthetaxpayer'smodifiedgrossincome.Therebateamountcannotexceed$350or$175ifmarriedfilingseparately.

TheStateisreimbursedannuallybytheauthorizingcountyforanylow‐incomepropertytaxrebatesgrantedunderthissection10.

StatutoryBasis: 7‐2‐14(A)and7‐2‐14.3NMSA1978

IntendedPurpose: Presumablytoeasetheincometaxburdenforlow‐incometaxpayersandtooffsetpropertytaxesforthosewhoseincomeisinsufficienttocovertheirpropertytaxessothattheyarenotforcedoutoftheirhomes.

History: LICTRwasoriginallyenactedin1972andamendedin1973,1974,1975,1977,1978,1981,1986,1987,1990,1992,1994,and1998.Thelow‐incomepropertytaxrebatewasoriginallyenactedin1994,andamendedin1997,and2003.

Evaluation: None.


ReliabilityFactor: 1‐Theserebatesareseparatelyreported.Noestimationisrequired.

10Section7‐2‐14.3NMSA1978


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditure $22,662.2 $22,481.7 $21,490.2 $21,164.6 $20,187.6

Claims 267,676 264,807 256,809 256,306 247,938

235,000

240,000

245,000

250,000

255,000

260,000

265,000

270,000

$18,500.0$19,000.0$19,500.0$20,000.0$20,500.0$21,000.0

$21,500.0$22,000.0$22,500.0$23,000.0

LICTR(thousands)

Low‐IncomeComprehensiveTaxRebates

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditure $393.8 $534.8 $567.4 $612.3 $557.9

Claims 1,633 1,789 1,877 1,988 1,816

‐

500

1,000

1,500

2,000

2,500

$‐

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

Property(thousands)

Low‐IncomePropertyTaxRebates


MEDICALANDHEALTHCARESERVICESGRTDEDUCTION


BriefDescription: ReceiptsfrompaymentsbytheU.S.governmentoranyagencythereofforMedicareservicesreceivedbycertainmedicalpractitionersandmedical‐relatedfacilities,receiptsofmedicaldoctorsandosteopathicphysiciansfrompaymentsbyathird‐partyadministratorofthefederalTRICAREprogram,andreceiptsofamedicaldoctororosteopathicphysicianfrompaymentsbyoronbehalfoftheIndianHealthServiceoftheU.S.DepartmentofHealthandHSDfortheprovisionofmedicalandotherhealthservicestocoveredbeneficiariesaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoretainhealthcarepractitionersinthestate.AccordingtoDOHandtheIndianAffairsDepartment,thedeductionwouldmakeitmoreprofitableformedicalproviderstoserveNativeAmericanpopulationsinNewMexicoasthosecommunitiesfacedifficultiesinrecruitinghealthcarepractitionersduetobelow‐averagesalaries.

History: Originallyenactedin1998,amendedin2000,2003,2007,2014,and2016.

Evaluation: Becausemedicalservicesofthistypearetypicallyreimbursedbasedonpre‐establishedrateschedules,healthcareproviderswouldlikelynotbeabletorecoupthegrossreceiptstax,eveniftheirservicesweresubjecttoGRT.

Likewise,theout‐of‐pocketportionofthepaymentisalsopredetermined,leavingtheproviderunabletopasstheburdenofthetaxontotheconsumer.Unlikeinpreviousversionsofthisreport,thisversionshowsthedepartmentwasabletoobtaintheamountofdeductionsasreportedbytaxpayersforfiscalyears2015and2016.NodataareavailablepriortoFY2015usingthismethodology.


ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.Noestimationisrequired,makingthisdeductionmorereliablethaninpreviousyearswhenthedepartmentuseddatafromtheCentersforMedicare&MedicaidServicesincombinationwiththestatewideaveragetaxratetocalculatethecostofthededuction.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $23,578.2 $38,496.1

0

5000

10000

15000

20000

25000

30000

35000

40000

45000


MedicalandHealthCareServicesDeduction


MEDICALCARESAVINGSACCOUNTEXEMPTIONFROMPIT


BriefDescription: TheinterestearnedonmedicalcaresavingsaccountsandmoneyreimbursedtoanemployeeforeligiblemedicalexpensesfromthoseaccountsormoneyadvancedtotheemployeebytheemployerforeligiblemedicalexpensesareexemptfromPIT.


IntendedPurpose: Presumablytoincentivizetheinvestmentinmedicalcaresavingsaccounts.


Evaluation: None.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $41.5 $34.8 $53.8 $61.4 $54.0

Claims 833 825 986 1,133 1,082

‐

200

400

600

800

1,000

1,200

$‐

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

PIT(thousands)

MedicalCareSavingsAccountExemption


MICROBREWERBEERANDSMALLWINERIESRATEDIFFERENTIALFROMLIQUOREXCISETAX


BriefDescription: Beginningin2013,beermanufacturedorproducedbyamicrobrewerandsoldinthisstateistaxedatarateof$0.08pergallononthefirst10,000gallonssoldand$0.28pergallononallgallonssoldmorethan10,000gallonsbutfewerthan15,000gallons.Forallgallonssold15,000ormore,thetaxrateis$0.41pergallon.

Until2013,beermanufacturedorproducedbyamicrobrewerandsoldinthisstatewastaxedatarateof$0.08pergallon;beerproducedbylargerbrewerswastaxedat$0.41pergallon.

Beginningin2013,ataxof$0.10perliteronthefirst80,000literssold,$0.20perliteronallliterssoldover80,000litersbutnotover950,000liters,and$0.30perliteroneachlitersoldover950,000litersbutnot1.5millionliters,isimposedonwinemanufacturedorproducedbyasmallwinegrowerandsoldinNewMexico;largerwinegrowersaresubjecttoanexcisetaxof$0.45perlitertax.

Priorto2013,ataxof$0.10perliteronthefirst80,000literssoldand$0.20perliteronallliterssoldover80,000litersbutlessthan950,000liters,wasimposedonwinemanufacturedorproducedbyasmallwinegrowerandsoldinNewMexicowhilelargerwinegrowersweresubjecttoanexcisetaxof$0.45perlitertax.

StatutoryBasis: 7‐17‐5(A)(5)and7‐17‐5(A)(6)NMSA1978

IntendedPurpose: PresumablytostimulatethemicrobreweryandsmallwineryindustryinNewMexicobyreducingtheirtaxexpense.

History: Originallyenactedin1993andamendedin1994,1995,1996,1997,2000,2000(2ndSpecialSession),2008,and2013.

The2013amendmentdecreasedthetaxrateongallonsofbeermanufacturedorproducedbyamicrobrewerandsoldbetween10,000and15,000barrels,andreducedthetaxrateonliterswinesoldbetween950,000and1.5million.

Evaluation: Preliminaryindicators,withrespecttomicrobreweriesandsmallwineries,suggeststhatthiscredithasbeeneffective.AccordingtoinformationpresentedtotheLegislaturebytheNewMexicoMicrobrewersGuild,thenumberofmicrobreweriesinNewMexicohasincreasedfrom23(with33locations)in2013toananticipated55(with70locations)by2016.Similarly,theGuildreportsthatbreweryexpansionsresultedin$14millionincapitalinvestmentinNewMexicoin2015.



ReliabilityFactor: 1‐Qualifyingbeerandwineproductionisseparatelyreported.Noestimationisrequired.TheFY15estimateinthisreportishigherthanwhatwasreportedlastyearduetomicrobrewerdatanotavailableatthattime.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

SmallWineries $433.3 $433.2 $494.7 $494.7 $492.7 $482.4

Microbrewers $307.9 $313.6 $374.3 $419.9 $578.2 $806.7

$‐

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

$1,400.0


MicrobrewersandSmallWineries


MILITARYCONSTRUCTIONSERVICESGRTDEDUCTION


BriefDescription: ReceiptsfrommilitaryconstructionservicesprovidedatNewMexicomilitaryinstallationslocatedinCurryCountyorOteroCountytoimplementspecialoperationsmissiontransitionprojectspursuanttocontractsenteredintowiththeUnitedStatesDepartmentofDefensearedeductiblefromgrossreceipts.

ThedeductionprovidedinthissectionappliestoreportingperiodsbeginningJuly1,2007andendingDecember31,2010.


IntendedPurpose: PresumablytoincentivizetheU.S.DepartmentofDefensetoimplement‐specialoperationsmissiontransitionprojectsatU.S.AirForcebaseslocatedinNewMexico.

History: Originallyenactedin2007throughreportperiodsendingDecember31,2010.

Evaluation: NotaxpayermaytakethisdeductionsinceitisnotavailableforreportingperiodsafterDecember31,2010.

Recommendations: RemovestatutorylanguagefromNMSAtopromotestatuteclarity.ThestatuteoflimitationsfortaxpayerstoamendreturnsforperiodsuptoandincludingDecember2010hasexpired.

ReliabilityFactor: 1‐SinceFY2011,noestimationisneededsincethedeductionisnolongeravailable.

FiscalImpact: None.


MILITARYTRANSFORMATIONALACQUISITIONPROGRAMSGRTDEDUCTION


BriefDescription: ReceiptsfrommilitarytransformationalacquisitionprogramsperformingresearchanddevelopmentandtestandevaluationservicesatNewMexicomajorrangeandtestfacilitybasesaredeductiblefromgrossreceipts.


IntendedPurpose: PresumablytoincentivizethelocationofmilitarytransformationalacquisitionprogramsatU.S.AirForcebasesinNewMexico.

History: Originallyenactedin2005withanexpirationdateofJune30,2008.

Amendedin2006toextendtheexpirationdatetoJune30,2016.

Amendedin2015toextendtheexpirationdatetoJune30,2025.

Evaluation: Notaxpayershaveclaimedthisdeduction,andtheDepartmentischallengedtoestimateitsfutureuse.Obtaininginformationaboutfederalacquisitionsisextremelyarduous;NewMexicoranges,testfacilitiesandbasesaresupportedbycontractingofficesacrosstheUnitedStates.Itisverypossiblethatnon‐residenttaxpayersareunawareofthisdeduction,andNewMexicoresidenttaxpayershavenotparticipatedinqualifyingprocurementprograms.


ReliabilityFactor: 1–Thisdeductionisseparatelyreported.



NATURALGASEXEMPTIONFROMOILANDGASSEVERANCETAX


BriefDescription: ExemptsnaturalgasthatcomesfromaproductionrestorationprojectforthefirsttenyearsaftertherestorationofproductionwhentheannualaveragepriceofWTIcrudeoilwaslessthan$24perbarrel.Notethestatutespecifiesanon‐standardcalendarofJunethroughMaywhencalculatingtheaverageannualprice.

StatutoryBasis: 7‐29‐4(B)(1)NMSA1978

IntendedPurpose: Presumablytoincentivizethedevelopmentofnaturalgasfromaproductionrestorationprojectwhenpricesarelow.

History: Originallyenactedin1980andamendedin1987,1989,1992,1995,1999,and2005.

Evaluation: NowellshavequalifiedforthisincentiveinthepastsixyearsduetothepriceofWTIcrudeoilexceeding$24/barrel(exemptionthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.

Recommendations: Considerraisingthepricethresholdtofurtherincentivizeproduction.

ReliabilityFactor: 1–Therehavebeennoexpendituresresultingfromthisexemption.

FiscalImpact: None.

$‐

$20

$40

$60

$80

$100

$120

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

AverageAnnualPriceperBarrelofOil

WTI

ExemptionThreshold


NATURALGASRATEDIFFERENTIALFROMOILANDGASEMERGENCYSCHOOLTAX


BriefDescription: Theemergencyschooltaxrateonnaturalgasis4%,unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.

Whentheaverageannualtaxablevalueofnaturalgaswasequaltoorlessthan$1.15perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis2%.

Whentheaverageannualtaxablevalueofnaturalgaswasgreaterthan$1.15perthousandcubicfeetbutnotmorethan$1.35perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis3%.


IntendedPurpose: Presumablytoincentivizehigh‐cost,low‐yieldproductionwhenpricesarelow.

History: Thesectionwasoriginallyenactedin1959andamendedin1963,1983,1993,1999,and2005.

Evaluation: DatareportedinONGARDwereusedtodeterminetheaveragetaxablevalueofnaturalgas.Nowellsqualifiedforthisratedifferentialforthetimeperiodscoveredbythisreportduetothatvalueexceeding$1.35/mcf(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilandnaturalgashasbeenlowenoughtosignificantlyaffectstateoperations.


ReliabilityFactor: 1‐Therehavebeennoexpendituresresultingfromthisratedifferential.

FiscalImpact: None.

$‐

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

AverageTaxableValueofNaturalGas

NaturalGas

ExemptionThreshold


NATURALGASRATEDIFFERENTIALFROMOILANDGASSEVERANCETAX


BriefDescription: Theoilandgasseverancetaxrateonnaturalgasis3.75%unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.

WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$24perbarrelinthepreviousyear,thetaxrateonnaturalgasfromawellworkoverprojectis2.45%.Notethestatutespecifiesanon‐standardcalendarofJunethruMaywhencalculatingthisaverageannualprice.

Whentheaverageannualtaxablevalueofnaturalgaswasequaltoorlessthan$1.15perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis1.875%.

Whentheaverageannualtaxablevalueofnaturalgaswasgreaterthan$1.15perthousandcubicfeetbutnotmorethan$1.35perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis2.1875%.

StatutoryBasis: 7‐29‐4(A)(4),7‐29‐4(A)(6),and7‐29‐4(A)(7)NMSA1978

IntendedPurpose: Presumablytoincentivizehigh‐cost,low‐yieldproductionwhenpricesarelow.

History: Thesectionwasoriginallyenactedin1980andamendedin1987,1989,1992,1995,1999,and2005.

Evaluation: NowellshavequalifiedforthisincentiveforthetimeperiodscoveredbythisreportduetothepriceofWTIcrudeoilexceeding$24/barrel.Alsothetaxablevalueofnaturalgas(asreportedbytheONGARDsystem)hasexceeded$1.35/mcf(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilandnaturalgashasbeenlowenoughtosignificantlyaffectstateoperations.

Recommendations: Considerraisingthepricethresholdstofurtherincentivizeproduction.

ReliabilityFactor: 1‐Therewerenoexpendituresresultingfromthisratedifferential.


FiscalImpact:

$‐

$20

$40

$60

$80

$100

$120

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016


WTI

ExemptionThreshold

$‐

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

AverageTaxableValueofNaturalGas

NaturalGas

ExemptionThreshold


NEWSPAPERSALESGRTDEDUCTION


BriefDescription: Receiptsfromsellingnewspapers,exceptfromsellingadvertisingspace,aredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoincentivizegrowthandoperationsofnewspapercompaniesinthestateasthefinalsaleofnewspaperstotheconsumeristaxed.


Evaluation: AccordingtotheNewspaperAssociationofAmerica,nationwidedailynewspapercirculationin2014(themostrecentyearavailable)wasdownnearly10%from2011.Withtheproliferationofdigitalmobiledevices,thisexpendituremightnotbeenoughtocounterthemarketshiftfromprinttoelectronicmedia.


ReliabilityFactor: 3‐TheNewspaperAssociationofAmericapublishesnationalannualnewspaperpaidcirculationdata.TheNewMexicoestimateisbasedonthenationaldataandNewMexico’spopulationinproportiontothatoftheUnitedStates.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $12,000.0 $11,800.0 $11,600.0 $11,400.0 $11,200.0 $10,000.0

$‐

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0


NewspaperSalesDeduction


NEWMEXICONATIONALGUARDMEMBERPREMIUMSPAIDFORGROUPLIFEINSURANCEEXEMPTIONFROMPIT


BriefDescription: Paymentforaservicemembers'grouplifeinsurancepremiumfromtheNationalGuardServiceMember’sLifeInsuranceReimbursementFundareexemptfromPIT.


IntendedPurpose: PresumablytoequalizethepremiumsofNationalGuardmemberswithprivatepremiumplans.


Evaluation: None.


ReliabilityFactor: 1‐Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $8.5 $7.3 $6.0 $6.3 $11.6

Claims 1,086 1,048 1,182 1,172 1,103

0

200

400

600

800

1,000

1,200

1,400

$‐

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

PIT(thousands

NMNationalGuardMemberPremiumsExemption


NONATHLETICSPECIALEVENTATNEWMEXICOSTATEUNIVERSITYGRTDEDUCTION


BriefDescription: ReceiptsfromadmissionstononathleticspecialeventsheldatthePanAmericanCenteratNewMexicoStateUniversity(“NMSU”)aredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytobringnon‐athleticeventstoNMSUratherthanhavingthemgotoElPaso,TX.

History: Originallyenactedin2007withanexpirationofJune30,2012.

Amendedin2012toextendtheexpirationtoJune30,2017.

Evaluation: GrossticketsaledataprovideddirectlybyNMSUreflectsacyclicaltrend.AccordingtoNMSU,thevastmajorityofnon‐athleticeventsheldatthePanAmericanCenterwouldotherwisebeheldinvariousvenueslocatedinElPaso,TXifitwasnotfortheincentivegeneratedbythisdeduction.Theamountsshownherediffersubstantiallyfromtheamountsshowninthe2015bookbecauseofanerror.The2015editionshowedtotaldeductionamountsinsteadofestimatedtax.

Recommendations: AsthisdeductionisscheduledtoexpireonJune30,2017,areviewofwhetheranextensionisappropriateordesirableshouldbeconducted.

ReliabilityFactor: 3–GrossticketsalefiguresprovidedbyNMSU’sAuxiliaryBusinessSupportOfficewereusedtoestimatethecostofthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thedeductionamountwasreportedinthe2015report.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $128.7 $113.0 $146.3 $111.8 $102.4 $171.4

Events 11 8 9 11 9 11

0

2

4

6

8

10

12

$‐$20.0$40.0$60.0$80.0$100.0$120.0$140.0$160.0$180.0


NonathleticSpecialEventsDeduction


NONPROFITELDERLYCAREFACILITYEXEMPTIONFROMGRT


BriefDescription: ReceiptsofnonprofitentitiesfromtheoperationoffacilitiesdesignedandusedforprovidingaccommodationsforretiredelderlypersonsareexemptfromGRT.


IntendedPurpose: Presumablytoreducethecostofcaringforretiredelderlypersons.


Evaluation: AccordingtothemostrecentannualreportfromHSD(2015)ofthe69nursingfacilities(“NFs”)operatinginthestateasofJune30,2105,65wereprivatelyowned.ThenumberofprivatelyownedNFsdidnotchangebetween2014and2015whichcouldmeantheexemptionisnotsignificantenoughtofulfillitspresumableintendedpurpose.However,itisdifficulttoevaluatetheeffectivenessofthisexpenditurewithouttakingintoaccountthatoperatingexpensesper‐bedforprivately‐ownedNFscontinuetoincreaseyear‐over‐year,asthecostsofMedicaidincreaseaswellduetohigherdemand.





NONPROFITORGANIZATIONSEXEMPTIONFROMGRT


BriefDescription: PurchasesandreceiptsofanorganizationthatwasgrantedataxexemptionunderSection501(c)(3)orSection501(c)(6)oftheU.S.InternalRevenueCodeareexemptfromGRTsolongasthereceiptsarenotderivedfromanunrelatedtradeorbusinessasdefinedinSection513oftheU.S.InternalRevenueCode.501(c)(3)organizationscomprisethemostcommonlyunderstoodtypeofnonprofitentities–healthcareservices,charities,churches,universities,scientificorganizations,animalshelters,andothers.501(c)(6)organizationsconsistofbusinessleaguesandassociations,chambersofcommerce,boardsoftrade,andothersimilarorganizations.Withrespecttobothtypesofentities,benefit(i.e.profits)cannotinuretoanymember,owner,directororofficer.


IntendedPurpose: PresumablytoeliminatetheGRTburdenonorganizationsthatcontributetotheoverallsocialandeconomicwelfareoftheircommunities.

History: TheexemptionfromGRTwasoriginallyenactedin1970andamendedin1983,1988,and1990.

Theexemptionfromcompensatingtaxwasoriginallyenactedin1969andamendedin1970,1983,and1990.

Evaluation: Toincreaseprecisionandclarity,theCompensatingTaxexemptionfornon‐profitsunder7‐9‐15wasde‐coupledfromthisexpenditurebecausethenon‐profitGRTexemptionunder7‐9‐29isanentity‐typeexemptionforallgrossreceiptsanon‐profitearnsfromsellinggoodsorservicesbarringincomecontribution.


ReliabilityFactor: 4‐Therearenodirectdatatoestimatethisexemption.PriortoFY16,TRDtookintoaccountdatafromtheNationalCenterforCharitableStatisticswhichreportedinAugust2015thatofthe7,063registeredpubliccharitiesandprivatefoundations,thestatereceivedabout$4billionintotalrevenuesoverthepreceding24months.TRDassumedthat50%ofthosewouldhavebeenotherwisetaxablegrossreceipts,resultinginanestimateddeductionofabout$2.4billionorlostrevenueofabout$16.4millionovertwoyears.AccordingtoGuideStar.org—aself‐reportingdata‐collectionwebsite—thereareabout2,802nonprofitorganizationsregisteredinNewMexico.Ofthose,theaverageannualgrossincomereportedintaxyear2015obtainedthroughfinancialinformationincludedinForm990isabout$1.1million.Further,researchofpublicrecordsthatTRDperformedduringthe20162ndSpecialSessionyieldedthecostofthisdeductiontothegeneralfundisof


about$68.4million,basedsolelyonpubliclyreportedgrossrevenuenumbersfromChristusSt.Vincent'sandPresbyterian's2013IRSForms990.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $73,000 $78,000 $78,000 $82,000 $82,000 $90,000

$‐$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000


NonprofitOrganizationsExemption


NONPROFITORGANIZATIONSFUNDRAISERSGRTDEDUCTION


BriefDescription: OrganizationsexemptfromfederalincometaxunderSection501(c)oftheInternalRevenueCodemaydeductthereceiptsfromtwofund‐raisingeventseachcalendaryear.Thisdeductiondoesnotapplyto501(c)(3)organizations,astheirreceiptsareexemptunderSection7‐9‐29NMSA1978.Itdoesapplytothemyriadofother501(c)organizationslistedintheInternalRevenueCode,suchaspoliticalorganizationsandcivicleagues(501(c)(4)),agriculturalandhorticulturalorganizations(501(c)(5)),social,fraternal,andrecreationalclubs,andahostofretirementfundsorpensionplans.Itshouldbenotedthatcontributionstotheseorganizationsarenotgrossreceipts.Rather,thisdeductionappliestofundraisingevents,inwhichtheseorganizationsprovideagoodorserviceinordertogeneratefundingfortheirmissions.


IntendedPurpose: PresumablytoallowtheseorganizationstoconductrelativelyisolatedfundraisingeventstosupporttheirmissionswithoutincurringGRTobligations.


Evaluation: None.

Recommendations: Clarifythelawbyexcluding501(c)(6)organizationsthatcarryonchamberofcommerce,visitorbureauandconventionbureaufunctionsoftheorganization.Thisdeductionspecificallyexcludes501(c)(3)organizationsbecausetheirreceiptsarealreadyexemptunderSection7‐9‐29NMSA1978.However,itdoesnotexcludethose501(c)(6)organizationsthatconducttheabovementionfunctions,whosereceiptsarealsoexemptunderSection7‐9‐29NMSA1978.

ReliabilityFactor: 4‐DatafromtheNationalCenteronCharitableStatisticsonnonprofitrevenuesandfromtheUrbanInstituteCenteronNonprofitsandPhilanthropywasusedtoestimatethepercentageofrevenuegeneratedfromprivatecontributionstoestimatethesizeofthisdeduction.TRDassumedthat501(c)organizationsearn5%ofthoseamountsthroughfundraisers.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $1,010.0 $1,010.0 $1,065.0 $1,065.0 $1,075.0 $1,090.0

$‐

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0


FundraisersforNonprofitDeduction


OFFICIATINGATNEWMEXICOACTIVITIESASSOCIATIONEVENTSEXEMPTIONFROMGRT


BriefDescription: Receiptsfromrefereeing,umpiring,scoring,orotherofficiatingatschooleventssanctionedbytheNewMexicoActivitiesAssociationareexemptfromGRT.


IntendedPurpose: Presumablytoreducethecosttopubliceducationinstitutionsthatprovideathleticopportunitiestotheirstudents.


Evaluation: Thisexemptionreducestheburdenonthetaxpayer,astheofficialswouldotherwiseberequiredtoregisterandfileasGRTtaxpayersforarelativelysmallamountofreceipts.


ReliabilityFactor: 3‐PayschedulespublishedbytheNewMexicoActivitiesAssociationareusedtoestimatetheimpactofthisexemption.BecauseGRTexemptionsarenotreportedatall,amoreaccurateestimationisproblematic.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $166.0 $169.0 $173.0 $177.0 $186.0 175.0

$155.0

$160.0

$165.0

$170.0

$175.0

$180.0

$185.0

$190.0


OfficiatingaNewMexicoActivitiesAssociationEventsExemption


OILANDOTHERLIQUIDHYDROCARBONSEXEMPTIONFROMOILANDGASSEVERANCETAX


BriefDescription: ExemptsoilandotherliquidhydrocarbonsthatcomefromaproductionrestorationprojectforthefirsttenyearsaftertherestorationofproductionwhentheannualaveragepriceofWTIcrudeoilwaslessthan$24perbarrel.Notethestatutespecifiesanon‐standardcalendarofJunethroughMaywhencalculatingtheaverageannualprice.

StatutoryBasis: 7‐29‐4(B)(2)NMSA1978

IntendedPurpose: Presumablytoincentivizethedevelopmentofoilandotherliquidhydrocarbonfromaproductionrestorationprojectwhenpricesarelow.

History: Originallyenactedin1980andamendedin1987,1989,and1992,1995,1999,and2005.

Evaluation: Thisexemptionprovidesincentiveforwellrestorationactivity.NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$24/barrel(exemptionthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.


ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisexemption.

FiscalImpact:

$0

$20

$40

$60

$80

$100

$120

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016


WTI

ExemptionThreshold


OILANDOTHERLIQUIDHYDROCARBONSRATEDIFFERENTIALFROMOILANDGASEMERGENCYSCHOOL

TAX


BriefDescription: IfoilandotherliquidhydrocarbonsthatareremovedfromastripperwellandtheaverageannualtaxablevalueofoilinthecalendaryearprecedingJuly1ofthefiscalyearinwhichthetaxratewasimposedwasnotgreaterthan$15perbarrel,therateis1.58%andgreaterthan$15perbarrelbutnotgreaterthan$18perbarrel,therateis2.36%.Theseratescompareto3.15%fornon‐stripperwelloilandotherliquidhydrocarbons.


IntendedPurpose: Presumablytoincentivizetheremovalofoilandotherliquidhydrocarbonfromastripperwellwhenpricesarelow.


Evaluation: Thisexemptionprovidesincentiveforwellrestorationactivity.NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$18/barrel(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.


ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisratedifferentialprovision.

FiscalImpact:

$0

$20

$40

$60

$80

$100

$120

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016


WTI

ExemptionThreshold


OILANDOTHERLIQUIDHYDROCARBONSRATEDIFFERENTIALFROMOILANDGASSEVERANCETAXRATE


BriefDescription: Theoilandgasseverancetaxrateonoilandotherliquidhydrocarbonsis3.75%unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.

WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$28perbarrelinthepreviousyear,thetaxrateonoilandotherliquidhydrocarbonsfromaqualifiedenhancedrecoveryprojectis1.875%.

WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$24perbarrelinthepreviousyear,thetaxrateonoilandotherliquidhydrocarbonsfromawellworkoverprojectis2.45%.

Whentheaverageannualtaxablevalueofoilwasequaltoorlessthan$15perbarrelinthepreviouscalendaryear,thetaxrateonoilandotherliquidhydrocarbonsfromastripperwellpropertyis1.875%.

Whentheaverageannualtaxablevalueofoilwasgreaterthan$15perbarrelbutnotmorethan$18perbarrelinthepreviouscalendaryear,thetaxrateonoilandotherliquidhydrocarbonsfromastripperwellpropertyis2.8125%.

StatutoryBasis: 7‐29‐4(A)(3),7‐29‐4(A)(5),7‐29‐4(A)(8),and7‐29‐4(A)(9)NMSA1978

IntendedPurpose: Presumablytoincentivizehighcostproductionwhenpricesarelow.


Evaluation: NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$28perbarrel(ratedifferentialthreshold).AlthoughthedifferentstatutesusetwoslightlydifferentcalendarsfortheaverageannualtaxablevalueofWTIcrudeoil,bothcalculationsgiveapricethatexceedstheexemptionthreshold.Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.


ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisratedifferentialprovision.

FiscalImpact: None.RefertochartforOilandOtherLiquidHydrocarbonsExemptionOilandGasSeveranceTax,andOilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasEmergencySchoolTax.


ORGANDONATIONDEDUCTIONFROMPIT


BriefDescription: Ataxpayermayclaimadeductionfromnetincomeinanamountnottoexceed$10,000oforgandonation‐relatedexpenses,includinglostwages,lodgingexpensesandtravelexpenses,incurredduringthetaxableyearbythetaxpayerorthetaxpayer'sdependentasaresultofthetaxpayer'sordependent'sdonationofahumanorgantoanotherpersonfortransferofthathumanorgantothebodyofanotherperson.


IntendedPurpose: Presumablytohelpremoveobstaclesthatpreventpeoplefrommakinglivingorgandonationsbyreducingtheassociatedfinanciallosses.


Evaluation: Whilefactorslikebloodtypeserveasanunchangeablebarriertodonatingorgans,forthosewhoarematches,thiscredithelpstooffsetrelatedexpenses.


ReliabilityFactor: 1–Thedeductionamountsforeachtaxpayerclaimingthisdeductionwerecomputed,makingthisdatamorereliablethaninpastyears,whenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $2.0 $2.6 $2.5 $2.4 $3.4

Claims 66 73 74 73 69

62

64

66

68

70

72

74

76

$‐

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

PIT(thousands)

OrganDonationDeduction


PENALTYPURSUANTTOSECTION7‐1‐71.2NMSA1978CREDITAGAINSTGRT,COMPENSATINGTAXANDWITHHOLDING

TAX


BriefDescription: PriortoJuly1,2010,taxpayerswhopaidthedoublelocaloptionpenaltyineffectpriortoJuly1,2007—imposedforincorrectlyreportingfoodandmedicalGRTdeductionscreatedin2004—couldclaimthiscredit.Thecreditisequaltotheamountofthepenaltypaid.


IntendedPurpose: Torefundpenaltiespaidforincorrectlyreportingthefooddeduction11orthehealthcarepractitionerservicesdeduction12.


Evaluation: ThiscredithasnocurrenteffectasallclaimsweresubmittedpriortoJuly1,2010.

Recommendations: Repeal.ThecredithasnotbeenavailablesinceJuly1,2010.


FiscalImpact: Nopossiblefiscalimpact.

11Section7‐9‐92NMSA197812Section7‐9‐93NMSA1978


PERSONSONEHUNDREDANDOLDEREXEMPTIONFROMPIT


BriefDescription: Theincomeofanindividualwhois(1)anaturalperson,(2)onehundredyearsofageorolder,and(3)notadependentofanotherindividualisexemptfromPIT.


IntendedPurpose: Presumablytoreducetheadministrativeburdenandfinancialburdenonthisagingpopulation.


Evaluation: None.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $4.4 $7.1 $3.1 $2.3 $2.2

Claims 104 78 78 77 106

0

20

40

60

80

100

120

$‐

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

PIT(thousands)

PersonsOneHundredandOlderExemption


PERSONSSIXTY‐FIVEANDOLDERORBLINDEXEMPTIONFROMPITANDACOMPREHENSIVETAXREBATE


BriefDescription: Anindividualwhois65yearsorolderorwhoisblindmayclaimanexemptionfromPITbasedonaslidingscale(nottoexceed$8,000).

Anindividualwhois65yearsoroldermayclaimadditionalexemptionsforthelow‐incomecomprehensivetaxrebate,thusqualifyingforahigherrebate.

StatutoryBasis: 7‐2‐5.2and7‐2‐14(C)NMSA1978

IntendedPurpose: Presumablytoreducethefinancialburdenonthosewhoarelikelytobelivingonfixedincomes.

History: ThePITexemptionwasoriginallyenactedin1985andamendedin1987.

Thecomprehensivetaxrebatewasoriginallyenactedin1972andamendedin1973,1974,1975,1977,1978,1981,1986,1987,1990,1992,1994,and1998.

Evaluation: Thenumberofclaimshasremainedrelativelyconstantoverthelastfourfiscalyears,whiletheamountoftheexpenditurehasdecreasedduetotheslidingscaleamountoftheexemption.Bothnumberofclaimsandexpendituresmayincreaseinkeepingwithtrendstowardanolderpopulation.


ReliabilityFactor: 1‐Fortherebatecomponent,theinformationisseparatelyreported.Noestimationisrequired.Fortheexemption,theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyears,whenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $1,058.8 $1,046.7 $1,029.0 $1,000.6 $983.1

Claims 88,674 90,241 92,321 99,487 97,225

82,00084,00086,00088,00090,00092,00094,00096,00098,000100,000102,000

$940.0

$960.0

$980.0

$1,000.0

$1,020.0

$1,040.0

$1,060.0

$1,080.0

PIT(thousands)

PersonsSixty‐FiveandOlderorBlindExemption

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $3,359.4 $3,429.2 $3,372.2 $3,375.6 $3,374.3

Claims 17,233 17,423 16,913 16,823 16,552

16,000

16,200

16,400

16,600

16,800

17,000

17,200

17,400

17,600

$3,320.0

$3,340.0

$3,360.0

$3,380.0

$3,400.0

$3,420.0

$3,440.0

Comprehensive(thousands)

PersonsSixty‐FiveandOlderorBlindRebate


PHYSICIANPARTICIPATINGINCANCERTREATMENTCLINICALTRIALSCREDITAGAINSTPIT


BriefDescription: AlicensedoncologistwhopracticesinruralNewMexicomayclaimacreditof$1,000foreachpatientparticipatinginacancerclinicaltrialundertheoncologist’ssupervision.RuralNewMexicoisdefinedasaclass‐Bcountyinwhichnomunicipalityhasapopulationover60,000accordingtothemostrecentdecennialcensus.

Thecreditiscappedat$4,000perphysicianperyear.


IntendedPurpose: ToincentivizetheparticipationincancerclinicaltrialsbyoncologistsworkinginruralNewMexico.

History: Originallyenactedin2011.Peritsoriginalenactment(SB282,§2),thecreditisnotavailablefortaxyearsbeginningafterDecember31,2014

Evaluation: Thecredithasneverbeentaken.ItcouldbethattherearenooncologistsparticipatingincancerclinicaltrialsinruralNewMexicoorthatthecreditisnotlargeenoughtoincentivizetheirparticipation.


ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.NotaxpayermayclaimthiscreditfortaxyearsbeginningafterDecember31,2014.

FiscalImpact: None.


PRESCRIPTIONDRUGSANDOXYGENGRTANDGGRTDEDUCTION


BriefDescription: Receiptsfromthesaleofprescriptiondrugs,oxygen,andoxygenservicesprovidedbyalicensedMedicaredurablemedicalequipmentprovideraredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.


IntendedPurpose: Presumablytoreducetheeffectivecostofprescriptiondrugsandoxygenasapublicwelfaremechanism.


Evaluation: Thisdeductionremovesthegrossreceiptstaxburdenfromsellers,whowouldotherwisepassitontoconsumersofthesemedicallynecessarygoods.


ReliabilityFactor: 3‐StatespecificdatapublishedbytheKaiserFamilyFoundationontotalretailsalesofprescriptiondrugswasusedtocalculatethisdeduction.(Datasourcesforoxygenandoxygenserviceshaveyettobeascertained.)ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $58,000.0 $61,000.0 $63,000.0 $65,000.0 $68,000.0 $74,000.0

$‐

$10,000.0

$20,000.0

$30,000.0

$40,000.0

$50,000.0

$60,000.0

$70,000.0

$80,000.0


PrescriptionDrugsandOxygenDeduction


PRESERVATIONOFCULTURALPROPERTYCREDITAGAINSTPITANDCIT


BriefDescription: TaxpayersmaytakeacreditonaPITorCITreturnof50%ofthecostofrestoring,rehabilitating,orpreservingpropertieslistedontheNewMexicoRegisterofCulturalProperties.

Thecreditmaynotexceed$25,000unlessthepropertyislocatedwithinadesignatedartsandculturaldistrict.Thecreditiscappedat$50,000forpropertieslocatedwithinanartsandculturaldistrict.

Thecreditisnotrefundable,butmaybecarriedforwarduptofouryears.


IntendedPurpose: Toencouragetherestoration,rehabilitationandpreservationofculturalproperties.

History: ThePITcreditwasoriginallyenactedin1984andamendedin2007.

TheCITcreditwasoriginallyenactedin1984andamendedin1986and2007.

Evaluation: Theactivityonthecredithasbeenfairlyconsistent.Thiscreditisnotrefundable;therefore,ataxpayermusthaveenoughtaxliabilitytotakethecredit.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $163.3 $155.1 $185.3 $233.4 $170.4

Claims 68 71 75 65 51

01020304050607080

$‐

$50.0

$100.0

$150.0

$200.0

$250.0

CombinedTaxes(thousands) CulturalPropertyPreservationCredit


PRODUCTIONORSTAGINGOFPROFESSIONALCONTESTSGRTDEDUCTION


BriefDescription: Receiptsfromproducingorstagingprofessionalboxing,wrestling,ormartialartsconteststhatoccurinNewMexico,includingreceiptsfromticketsalesandbroadcasting,aredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoincentivizeprofessionalboxing,wrestling,andmartialartsconteststotakeplaceinNewMexico.


Evaluation: ThenumberofapplicableeventssanctionedbytheNewMexicoAthleticCommissionhasincreasedsincetheenactmentofthisdeduction.


ReliabilityFactor: 3‐TheNewMexicoAthleticCommissionreportsthatin2015,30sanctionedeventswereheld,accountingforapproximately$1.5millioningrossreceiptsandforegonerevenueofabout$103,000.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $84.0 $102.0 $84.0 $120.0 $103.1 $97.2

$‐

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

GRT(thousands)

ProductionorStagingofProfessionalContestsDeduction


PUBLICATIONSALESGRTDEDUCTION


BriefDescription: Receiptsfrompublishingnewspapersormagazinesaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoincentivizegrowthandoperationsofpublishingcompaniesinthestate.


Evaluation: Withtheproliferationofdigitalmobiledevices,thisexpendituremightnotbeenoughtocounterthemarketshiftfromprinttoelectronicmedia.


ReliabilityFactor: 2‐Taxpayerreporteddeductionsfiledbypublishing‐relatedNAICSsectorswereusedtoestimatethecostofthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $200.0 $230.0 $280.0 $250.0 $240.0 $210.0

$‐

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0


PublicationServicesDeduction


PURSESANDJOCKEYREMUNERATIONATNEWMEXICORACETRACKSEXEMPTIONFROMGRT


BriefDescription: Thereceiptsofhorsemen,jockeys,andtrainersfromracepursesatNewMexicohorseracetrackssubjecttothejurisdictionofthestateracingcommissionareexemptfromGRT.

StatutoryBasis: 7‐9‐40(A)NMSA1978

IntendedPurpose: Presumablytoreducethetaxburdenofhorsemen,jockeysandtrainers.


Evaluation: Althoughhorseracingattendanceandtotalnumberofhorseracingeventsaredownstatewideandnationwide,annualpurseshavenotdecreasedinNewMexico.


ReliabilityFactor: 3–YearlydatatrackedbytheJockeyClubforNewMexicotrackswascombinedwithanindustrystandardrateof10%ofpursesgoingtojockeysandtrainerseach.TheexemptionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thepursesin2015were$28,896,169for1,463racesforanaveragepurseof$19,751.TheFY2016costwasextrapolatedfrompartial2016data.Thefindingofadditionalexternaldatasourcesallowedthisnewestimatetobeprovidedthisyear.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $213.2 $217.5 $206.5 $201.6 $200.4 $210.7

$190.0

$195.0

$200.0

$205.0

$210.0

$215.0

$220.0


PursesandJockeyRemunerationatNMRacetracksExemption


RAILROADEQUIPMENT,AIRCRAFT,ANDSPACEVEHICLESEXEMPTIONFROMCOMPENSATINGTAX


BriefDescription: Theuseofrailroadlocomotives,trailers,containers,tendersorcarsprocuredorboughtforuseinrailroadtransportation;theuseofcommercialaircraftboughtorleasedprimarilyforuseinthetransportationofpassengersorpropertyforhireininterstatecommerce;andtheuseofspacevehiclesfortransportationofpersonsorpropertyin,to,orfromspaceareexemptfromcompensatingtax.


IntendedPurpose: Presumablytoreducethecostofrailroadtransportation,aircrafttransportation,andspacetransportation;potentiallytocomplywiththepreemptiondoctrine.


Evaluation: None.





REALESTATETRANSACTIONSGRTDEDUCTION


BriefDescription: ReceiptsfromrealestatecommissionsonthesaleofrealpropertywhichissubjecttotheGRT(newconstructionunderSection7‐9‐53(A)NMSA1978)aredeductiblefromgrossreceipts.Typically,brokeragecommissionsaredeductiblefromgrossreceiptswhentheunderlyingsalesarenotsubjecttotax.Withrespecttonewconstruction,thepartofthesalethatreflectsthevalueofthenewlyconstructedimprovementsistaxable,butthevalueoftheunderlyingrealestateisdeductible.


IntendedPurpose: Presumablytoincentivizethegrowthandoperationsofrealestatecompaniesinthestate.


Evaluation: None.





RENEWABLEENERGYPRODUCTIONCREDITAGAINSTPITANDCIT


BriefDescription: TaxpayersareabletoreceiveacreditagainstPITandCITforproducingelectricityusingsolarlightorheat,wind,orbiomass.Thecreditonlyappliestotaxpayersthatgeneratetheelectricityforsaletothirdparties.

Theamountofthecreditisequaltoonecentperkilowatt‐hourupto400,000megawatt‐hoursannuallypertaxpayerforwind‐orbiomass‐derivedelectricity.Theaggregatecapforallwindprojectsissetat2millionmegawatt‐hours.

Theamountofthecreditisequaltoanywherefromoneandahalfcentstofourcentsperkilowatt‐hourupto200,000megawatt‐hoursannuallypertaxpayerforsolar‐light‐derivedorsolar‐heat‐derivedelectricitydependingontheconsecutivetaxableyearforwhichthecreditisbeingclaimed.Theaggregatecapforallsolarprojectsissetat500,000megawatt‐hours.

Thewindandsolarproductioncapsmaybemonetizedbymultiplyingthekilowatt‐hourratestimesthesetaggregatecaps.Thewindaggregatecapmaximizedat2millionmegawatt‐hoursrepresentsacreditof$20million.Thesolarcreditvariesbyyear,onaveragetheyearlycreditis$0.0275perkilowatt‐hour.Thesolarcreditrangesfrom$0.015inthefirstyearofproductionto$0.04inthesixthyearofproduction,downto$0.02inthetenthyear.Wheneverthe500,000megawatt‐hoursareused,theaverageaggregatecreditis$13.75million.

Aqualifiedtaxpayeriseligiblefortherenewableenergyproductiontaxcreditfortenconsecutiveyears,beginningonthedatethequalifiedenergygeneratorbeginsproducingelectricity.


IntendedPurpose: PresumablytoencouragetheconstructionanddevelopmentofrenewableenergygeneratingfacilitiesinNewMexico,andtosequesterorcontrolcarbondioxideemissions.

History: ThePITcreditwasoriginallyenactedin2007.TheCITcreditwasoriginallyenactedin2002andamendedin2003,2005and2007.

Evaluation: Becauseprogramimplementation,sometaxpayersproduceelectricity,butareprecludedfromclaimingthecredit.

Forthosewhobeganproducingbefore2008,thecreditisnotrefundable,butmaybecarriedforwardforfiveyears.Thishasresultedinasignificantamountofunclaimedcreditbuildingupovertime.


TheEconomicAnalysisofNewMexicoRenewableEnergyProductionTaxCredit(2015)studyconductedbyHDR,Inc.13withthecollaborationofEMNRDandTRD,presentsfindingsaboutthelevelofinvestmentinrenewableenergyfacilities.Thestudysummarizestheeffectsofprivateinvestmentandthiscredit,onjobcreation,wages,andpollutionreduction.

HDR,Inc.(2015)developedeconomicmultiplierstoestimatethelaborincomeandemploymentimpactsassociatedwiththeconstructionandoperationofREPTCfacilitiesfrom2003through2012.Totallaborincomeisestimatedat$434million,orabout$43millionperyearonaverage.Theemploymentimpactisestimatedtobeover9,000jobs,orabout900peryearonaverage.Thegrossreceiptstaxgeneratedasaresultofwindandsolardevelopmentandoperationsisabout$92,000overthe10‐yearperiodofthecredit.

HDR,Inc.(2015)estimatesthelabor‐to‐taxexpenditureratioat14%,whichmeansthatforevery$0.14intaxexpenditure,REPTCprojectsgenerated$1inlaborincome.Also,forevery$0.15intaxexpenditure,REPTCprojectsgenerated$1worthofmonetizedreductioninpollution.Overthe10‐yearperiod,pollutionwasreducedbyover11milliontonsofCO₂,whichinmonetarytermsrepresentspollutionreductionvaluedat$400million.

Thiscreditmeetsitsintendedpurposeofincentivizingtheproductionofrenewableenergyandreducingpollution,whilecreatingjobs.

Recommendations: Restructuretheprogramsothatthosewhohavemadeinvestmentsbasedonthepromiseofreceivingthecreditaregiventhefull10‐yearbenefitofthecredit.Ascostsofgeneratingrenewableenergyhavereportedlydecreased,considerloweringtheper‐megawatthourcreditrate,butexpandingtheaggregatecap.Thesechangesmayresultinhighervolumesofrenewableenergyproductionovershorterperiodsoftime.

ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.FiscalImpact:

13HDR,Inc.2015.“EconomicAnalysisoftheNewMexicoRenewableEnergyProductionTaxCredit.”http://www.emnrd.state.nm.us/ECMD/CleanEnergyTaxIncentives/documents/REPTCFinalReportFeb2015.pdf(accessedSeptember24,2015).

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $3,340.2 $17,340.5 $12,833.8 $13,912.7 $15,075.5

Claims 6 21 33 18 19

0

5

10

15

20

25

30

35

$‐$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0$12,000.0$14,000.0$16,000.0$18,000.0$20,000.0


RenewableEnergyProductionCredit


RESEARCHANDDEVELOPMENTSMALLBUSINESSCREDITAGAINSTGRTORFIFTYPERCENTCREDITAGAINST

WITHHOLDINGTAX


BriefDescription: Aqualifiedresearchanddevelopmentsmallbusinessesmayclaimacreditequaltothesumofallgrossreceiptsor50%ofwithholdingtaxesowedtoNewMexicoforthereportingperiodinwhichthebusinessqualifiesforthecredit.

Aqualifiedbusinessisacorporation,generalpartnershiporsimilarentitywith25orfeweremployees,withannualrevenuesunder$5million,andwhosequalifiedresearchanddevelopmentexpendituresfortheprior12monthswasequaltoatleast20%oftotalexpendituresforthosecalendarmonths.

StatutoryBasis: 7‐9H‐1etseq.NMSA1978(repealed).

IntendedPurpose: Presumablytoincentivizethefoundationandexpansionofsmallresearchanddevelopmentbusinesses.

History: Originallyenactedin2005tobeeffectiveagainstGRTandcompensatingtaxwithanexpirationdateofJune30,2009.Thecreditwasnotextendedpriortoitsexpirationdate.

Reenactedin2011,withanexpirationdateofJune30,2015removedcompensatingtax,andtoreducethewithholdingtaxcreditto50%.

Evaluation: ThiscreditexpiredforasecondtimeonJune30,2015andwasunderutilized.Itsrelationshiptosimilarcreditsanddeductionsshouldbestudiedtounderstandhowtheyinteract.Alternativeapproachestostimulatingsmallbusinessescriticaltothemoderneconomy,suchasresearchanddevelopmentbusiness,shouldbeexplored.

Recommendations: None


NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2014hasbeenredacted.Noclaimsotheryears.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $‐ $‐ $‐ $‐ $‐

Claims 0 0 0 0 0

00.20.40.60.81

$‐$0.2$0.4$0.6$0.8$1.0

CombinedTaxes

(thousands)

ResearchandDevelopmentSmallBusinessCreditDatahavebeenredacted


RURALHEALTHCAREPRACTITIONERCREDITAGAINSTPIT


BriefDescription: Licenseddoctors,osteopathicphysicians,dentists,clinicalpsychologists,podiatristsandoptometristswhoprovidehealthcareservicesinNewMexicoinaruralhealthcare,underservedareainataxableyearmayclaimacreditofupto$5,000againstPIT.

Licenseddentalhygienists,physicianassistants,certifiednursemidwives,certifiedregisterednurseanesthetists,certifiednursepractitionersandclinicalnursespecialistswhoprovidehealthcareservicesinNewMexicoinaruralhealthcare,underservedareainataxableyearmayclaimacreditofupto$3,000againstPIT.

Toqualifyforthefullcredit,apractitionermustprovidehealthcarefor2,080hoursatapracticesiteinanapprovedarea.Ifthepractitionerprovidedhealthcareforatleast1,040hours,thepractitioneriseligiblefor50%ofthecredit.


IntendedPurpose: Presumablytoimproveaccesstohealthcareinruralorunderservedareasofthestate,byprovidingataxbenefittohealthcarepractitionerswhoworkinthoseareas.


Evaluation: ExceptforaslightdecreaseinFY2013,thenumberofclaimsincreasedsteadilybetweenFY2011andFY2015.Thisincreasemaybeanindicationthatthiscreditisanincentivetomovepractitionerstoruralareas.AreportbytheNewMexicoHealthcareWorkforceCommissionindicatesthatwhile“financialincentivessuchas…taxcreditshavebeenimportantrecruitmentandretentiontools”,therecontinuestobeashortageofphysiciansinmanyruralpartsofthestate.(NewMexicoHealthCareWorkforceCommitteeReport,October1,2014,pg.4).




FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $6,387.4 $6,583.8 $6,504.1 $6,132.4 $6,547.7

Claims 1,639 1,719 1,719 1,933 2,002

0

500

1,000

1,500

2,000

2,500

$5,900.0

$6,000.0

$6,100.0

$6,200.0

$6,300.0

$6,400.0

$6,500.0

$6,600.0

$6,700.0

PIT(thousands)

RuralHealthCarePractitionersCredit


RURALJOBCREDITAGAINSTMODIFIEDCOMBINEDTAX,PIT,ANDCIT


BriefDescription: EligibleemployersmayearntheruraljobtaxcreditforeachqualifyingjobcreatedafterJuly1,2000,applyingittoGRT(lesslocaloptionGRT),compensatingtax,withholdingtax,PIT,orCIT.

AneligibleemployerisonewhomEDDhasapprovedforJobTrainingIncentiveProgramassistance.

Aqualifyingjobmeansajobfilledbyaneligibleemployeefor48weeksina12‐monthqualifyingperiod.

Thetotalcreditauthorizedis25%ofthefirst$16,000ofwagespaid,ifthejobisperformedorbasedinaTier1Areaand12.5%ofthefirst$16,000ofwagespaid,ifthejobisperformedorbasedinaTier2Area.However,thecreditistakeninannualincrements:6.25%ofthefirst$16,000inwagespaidoverfourqualifyingperiods(years)ifthejobisperformedatalocationinaTier1Area;6.25%ofthefirst$16,000inwagespaidovertwoqualifyingperiodsifthejobisperformedatalocationinaTier2Area.

StatutoryBasis: 7‐2E‐1.1NMSA1978

IntendedPurpose: Toencouragebusinessestoexpandintoruralareasofthestate.

History: Originallyenactedin2007,thecreditwasamendedin2013totightenthedefinitionofqualifyingjobsandtoclarifythedefinitionofwages.

Evaluation: StagnantemploymentgrowthinruralNewMexicoisaplausibleexplanationforthedecreasesincreditamountsfromFY2010toFY2012;inFY2014anincreaseinclaimswasfollowedbyasharpdeclineinFY2015.ThecreditutilizationreportedforFY2016representsthelargestamountofthiscreditinrecentyears.AccordingtoUNM’sBureauofBusinessandEconomicResearch(BBER)quarterlyforecastoftheNewMexicoEconomy(October2016),thestate’sAgricultural,Forestry,Fishing,andHuntingexperiencedanincreaseof7%fromcalendaryear2015to2016intermsofwageandsalarydisbursements.Atthesametime,BBERreportsNMfarmproprietor’sincomeincreasedby22%inthesameperiod.Further,theincreaseincreditscanbeattributedtoanincreaseinprivatesectoremploymentof2.3%in2016versusthepreviousyear.


ReliabilityFactor: 2–Althoughthiscreditisseparatelyreported,itsreliabilityhasbeentemporarilymovedfrom1to2becauseofacertainissuewithinthereportingmechanism,whichiscurrentlyunderreviewbytheDepartment’sAuditandComplianceDivision(ACD).Therefore,thisexpenditurerequiresanadjustmentbasedonrecommendationprovidedbyACD.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $457.4 $242.8 $82.5 $502.9 $132.0 $532.3

Claims 51 26 24 85 9 38

0102030405060708090

$‐$100.0$200.0$300.0$400.0$500.0$600.0$700.0$800.0$900.0

$1,000.0


RuralJobTaxCredit


SALEANDUSEOFAGRICULTURALIMPLEMENTS,FARMTRACTORS,AIRCRAFT,ANDMOTORVEHICLESTHATDON’THAVETOBE

REGISTEREDGRTANDCOMPENSATINGTAXDEDUCTION


BriefDescription: (A)50%ofthereceiptsfromselling,orofthevalueof,farmtractorsandagriculturalimplementswhenusedbypersonsengagedinthebusinessoffarmingorranching,aredeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.

50%ofthereceiptsfromselling,orofthevalueof,vehiclesnotrequiredtoberegisteredundertheMotorVehicleCodearedeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.

50%ofthereceiptsfromselling,orofthevalueof,aircraftnotboughtorleasedprimarilyforuseinthetransportationofpassengersorpropertyforhireininterstatecommercearedeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.

(B)Receiptsofanaircraftmanufactureroraffiliatefromsellingaircraft,orfromsellingaircraftflightsupport,pilottrainingormaintenancetrainingservicesaredeductiblefromgrossreceipts.

(C)ReceiptsfromsellingaircraftpartsormaintenanceservicesforaircraftoraircraftpartsaredeductiblefromGRT.


IntendedPurpose: Presumablytoincentivizeagriculturalactivitiesbyreducingtheeffectivecostofagriculturalimplementsandfarmtractors.PresumablytoincentivizethedevelopmentoftheaircraftindustryinNewMexicobyreducingrelatedcostsofsellingandusingaircraftforthingsotherthantransportationofpassengersorpropertyforhireinintrastatecommerce.

History: TheGRTdeductionwasoriginallyenactedin1969andamendedin1975,1998,2000,2007,and2014.The2014amendmentexpandedthedeductiontoallowanyentitysellingaircraftpartsormaintenanceservicesforaircraftoraircraftpartstotakethedeductionstartingJuly1,2015.

Thecompensatingtaxdeductionwasoriginallyenactedin1966andwasamendedin1969,1975,1988,and1998.

Evaluation: Totheextentthattheagriculturalimplementsareusedintheproductionofagriculturalgoodsintendedforsale,thisdeductioncouldbeviewedasreducingtheeffectsofpyramiding.

Totheextentthattheaircraftareusedintheproductionofagriculturalgoodsintendedforsale,thisdeductioncouldbeviewedasananti‐


pyramidingdevice.FromFY2015forward,taxpayerswishingtotakethisdeductionwillberequiredtoseparatelystatetheamountdeducted.However,becausethissectioncontainsseveraldifferentdeductions,separatingeachsubsectionfromthewholeisnotpossible.


ReliabilityFactor: 2‐ThisestimateisbasedonreporteddeductionsfromselectedNAICSindustrygroups,calculatedatthestatewideaverageeffectivetaxrate.Thecompensatingtaxportionisestimatedusingtheamountofcompensatingtaxpaidintheapplicablesectors.Assumingthatallcompensatingtaxeligiblepurchasesmadewithinthesectorwouldhavebeendeductedat50%,thepaidremainderwouldbeequaltotheamountdeducted.

2‐GrossreceiptsdeductionsreportedbytaxpayersclassifiedasSupportforAirTransportationwereusedtoestimatetheimpactofthisdeduction.Alldeductionsreportedbytheselectedsectorswereassumedtoresultfromthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CompTax $118.0 $67.0 $377.0 $679.0 $906.0 $816.0

GRT $2,000.0 $2,300.0 $2,000.0 $2,100.0 $2,100.0 $2,100.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0


(A)SaleandUseofAgriculturalImplements,FarmTractors,AircraftorUnregisteredVehicles50%Deduction


FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $1,200.0 $1,400.0 $1,500.0 $1,600.0 $1,800.0 $1,700.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0


(C)SaleofAircraftPartsandMaintenanceServicesDeduction

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $2,400.0 $2,800.0 $3,000.0 $3,300.0 $3,600.0 $3,500.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0Expenditures(thousands)

(B)SaleofAircraftManufacturer,etal.,Deduction


SALEOFCERTAINSERVICESTOANOUT‐OF‐STATEBUYERGRTDEDUCTION


BriefDescription: ReceiptsfromperformingaserviceinNewMexicoaredeductiblefromgrossreceiptsifthesaleoftheserviceismadetoanout‐of‐statebuyer.TheproductoftheservicemustbedeliveredtothebuyeroutsideofNewMexicoandtheproductoftheservicemustbeinitiallyusedbythebuyeroutsideofNewMexicotoqualifyforthededuction.

ThebuyermustpresentanappropriatenontaxabletransactioncertificateorotherevidenceacceptabletotheTRDSecretary.


IntendedPurpose: Presumablytoencourageserviceexportationbyequalizingtaxtreatmentwithout‐of‐stateserviceproviders,mostofwhicharenotsubjecttoasalestaxonservices.

History: Originallyenactedin1969andamendedin1973,1977,1983,1988,1989,1998,and2000.

Evaluation: None.





SALEOFFOODATRETAILFOODSTORESGRTDEDUCTIONANDHOLDHARMLESSDISTRIBUTION


BriefDescription: Receiptsfromqualifyingfoodsalesatretailfoodstoresasdefinedunderthefederalfoodstampprogramaredeductiblefromgrossreceipts.

Thedeductionisrequiredtobeseparatelystatedbythetaxpayer.

TheoriginallegislationenactedprovisionsintheTaxAdministrationActstatingthattherevenuesofmunicipalandcountygovernmentswouldbeheldharmlessfromanylostrevenueresultingfromthededuction.

StatutoryBasis: 7‐9‐92,7‐1‐6.46and7‐1‐6.47NMSA1978

IntendedPurpose: Presumablytoreducetheburdenoftaxingfood.

History: TheGRTdeductionwasoriginallyenactedin2004andhasnotbeenamended.

Theholdharmlessprovisionwasoriginallyenactedin2004.Amendedin2006,2007and2013.The2013amendmentphased‐outtheholdharmlessdistributiontolargercountiesandmunicipalitiesovera15‐yearperiodstartingJuly1,2015.Duringthe20162ndspecialsessionthestatutewasamendedtoaddapenaltyforincorrectlyfilingforthefoodandmedicaldeductionsthatresultinholdharmlessdistributionsinsteadofotherexemptionsordeductionswhichmustbetakenfirst.Thepenaltyisequalto20%ofthevalueoftheholdharmlessdistributionresultingfromtheincorrectdeduction.

Evaluation: AsevidencedbythesizeoftheGRTdeduction,thisreducesthecostsoffood.Becauseoftheholdharmlessprovisionandthelossoftherevenuebeingmadeupthroughothertaxburdens,thisreductionhasasignificantcosttoboththeGeneralFundandthetaxpayersitbenefits.


ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.TheestimatereflectstheamountsofGRTrevenueforgonebymultiplyingtheGRTdeductionamountsbythestatewideaverageGRTrateforeachyear.Thehold‐harmlessisreportedseparatelyandnoestimationisrequired.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

HoldHarmless $98,808.0 $103,153.6 $104,484.2 $107,063.8 $107,059.1 $108,850.0

GRT $121,013.7 $126,180.5 $128,644.0 $131,884.4 $131,878.7 $133,755.2

$‐

$50,000.0

$100,000.0

$150,000.0

$200,000.0

$250,000.0

$300,000.0


SaleofFoodatRetailFoodStoresDeduction


SALEOFSOFTWAREDEVELOPMENTSERVICESGRTDEDUCTION


BriefDescription: Receiptsfromthesaleofsoftwaredevelopmentservicesthatareperformedinaruralareabyaneligiblesoftwarecompanyaredeductiblefromgrossreceipts.Aruralareaisanywhereexceptanincorporatedmunicipalitywithapopulationofmorethan50,000


IntendedPurpose: Tostimulatenewbusinessdevelopmentinruralareas.


Evaluation: Determiningwhetherthisdeductionisthecauseofanyexpansioninthetargetedlocationsorforthetargetedindustriesisimpossible,but,basedonTRD’sestimatemethodology,theamountoftheapplicabledeductionshasincreasedsignificantlyinrecentyears.


ReliabilityFactor: 2‐Grossreceiptsdeductionsfortaxpayersclassifiedassoftwarepublishersandcomputerprogrammersreportedoutsideofincorporatedmunicipalitiesareassumedtofallintothiscategory.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $580.0 $650.0 $1,150.0 $1,480.0 $2,240.0 $2,357.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0


SaleofSoftwareDevelopmentServicesDeduction


SALEOFTEXTBOOKSINCERTAINBOOKSTORESEXEMPTIONFROMGRT


BriefDescription: Receiptsofcertainbookstoresfromsellingtextbooksandothermaterialsrequiredforcoursesatapublicpost‐secondaryeducationalinstitutiontoastudentenrolledattheinstitutionareexemptfromGRT.Onlybookstoreslocatedonthecampusoftheinstitutionandoperatedpursuanttoacontractualagreementwiththeinstitutionareeligible.


IntendedPurpose: Presumablytoreducethecostofeducationalmaterialstothoseattendinghighereducationalinstitutions.


Evaluation: Whilethecostoftextbooksisonlyonecomponentoftheoverallcostofacollegeeducation,theexemptionprovidessomerelief.

Recommendations: Considerexpandingtheexemptionsothatitisnotlimitedtobookstoresoperatedbyapost‐secondaryeducationinstitution.Off‐campusschoolbookstoresfrequentlystockrequiredtextbooksandmaterialsforuniversitycourses.

ReliabilityFactor: 4‐ThetextbookcomponentoftheestimatedcostofattendancedataformajorNewMexicopublicuniversitieswereusedtoestimatetheimpactofthisexemption.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $7,100.0 $7,500.0 $7,900.0 $8,300.0 $8,700.0 $8,800.0

$‐

$1,000.0

$2,000.0$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$8,000.0

$9,000.0

$10,000.0


SaleofTextbooksExemption


SALESTONONPROFITORGANIZATIONSGRT,GGRT,ANDCOMPENSATINGTAXDEDUCTION


BriefDescription: Grossreceiptsfromsellingtangiblepersonalpropertyto501(c)(3)organizationsforuseintaxexemptfunctions,andgrossreceiptsfromthesaleofconstructionmaterialstoa501(c)(3)organizationformedforthepurposeofprovidinghomeownershipopportunitiestolow‐incomefamiliesaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.Also,out‐of‐statepurchasesofanorganizationthatwasgrantedataxexemptionunderSection501(c)(3)orSection501(c)(6)oftheU.S.InternalRevenueCodeareexemptfromtheCompensatingTaxsolongasthereceiptsarenotderivedfromanunrelatedtradeorbusinessasdefinedinSection513oftheU.S.InternalRevenueCode.


IntendedPurpose: Presumablytosubsidizetheactivitiesofcertaintypesofnonprofitentities.


Evaluation: Thistaxexpenditureprovidesgovernmentsupporttononprofitentitiesintheformofreducedtaxburden.


ReliabilityFactor: 4‐Nodirectdatawithwhichtoestimatetheimpactofthisdeductionexists.Theestimateshowsanupdatedmethodologycomparedtothe2015TaxExpenditureReport.Inthisversion,TRDtookintoaccounttheaveragegrossincomeofasampleof2,802nonprofitorganizationsinNewMexicoobtainedthroughGuideStar.org—aself‐reportingweb‐baseddatabase.TRDassumedthataportionofthegrossincomeinthesamplewouldbeusedforthepurposesofthisdeduction.ThedeductionamountisthenmultipliedbythestatewideaverageGRTrateforFY2014–FY2016toestimatethecostusing50%ofthegrossincomedataasreportedthroughForm990infederalincometaxreturnsforeachyearavailable.ThisestimatedoesnottakeintoaccountthesplitbetweenGRTandCompensatingtaxdeductions.


FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $15,000.0 $15,000.0 $15,000.0

0

2000

4000

6000

8000

10000

12000

14000

16000


SalestoNonprofitOrganizationsDeduction


SALESTOQUALIFIEDFILMPRODUCTIONCOMPANYGRTANDGGRTDEDUCTION


BriefDescription: Receiptsfromsellingorleasingpropertyto,andfromperformingservicesfor,aqualifiedproductioncompanyaredeductiblefromgrossreceiptsorfromgovernmentalgrossreceipts.

Thebuyer(afilmproductioncompany)mustpresentanontaxabletransactioncertificate(NTTC)tothesellerandcanonlydeliveronewithrespecttoproductioncosts.

ThisdeductioncannotbeusedinconjunctionwiththefilmproductiontaxcreditasdescribedinSection7‐2F‐1(L).


IntendedPurpose: PresumablytoincentivizeoperationsofthefilmindustryandfilmproductionsinNewMexicopriortotheexistenceofthefilmproductiontaxcredit(Section7‐2F‐1etseq.NMSA1978).


Evaluation: None.

Recommendations: Basedonthevaluetothetaxpayer,thepossibilityofclaimingthisdeductioninsteadoftheFilmProductionTaxCreditisverysmall.Forthisreason,TRDrecommendsthisstatutetoberepealed.




SALESTOSTATE‐CHARTEREDCREDITUNIONSGRTANDGGRTDEDUCTION


BriefDescription: Receiptsfromsellingtangiblepersonalpropertytostate‐charteredcreditunionsaredeductiblefromgrossreceiptstothesameextentthatreceiptsfromthesaleoftangiblepersonalpropertytofederalcreditunionsaredeductible.


IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenfederally‐charteredcreditunionsandstate‐chartedcreditunionsandtreatstate‐charteredcreditunionsasaninstrumentalityofstategovernment.


Evaluation: None.


ReliabilityFactor: 3‐AccordingtotheNationalCreditUnionAdministration(NCUA),NewMexicohad20statecharteredcreditunionsin2016.NCUAalsopublishesadocumentonoperatingcostsforastatecharteredcreditunion.Fromthisdocumentthetangiblepropertycostsestimate(includinganestimated20%of“OtherOperatingCosts”and“MarketingCosts”)wasscaledagainstthecompensationdatashownforeachofthestatecharteredcreditunions.ThetotalofthesedeductionsismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thisestimatechangedsignificantlybecauseofmoreaccurateestimationoftangibleproperty.

FiscalImpact:

FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $238.8 $255.2 $261.4 $285.4 $477.4

CreditUnions 23 23 22 20 20

1415161718192021222324

$‐

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0


SalestoState‐CharteredCreditUnionsDeduction


SOLARENERGYSYSTEMSGRTDEDUCTION


BriefDescription: Receiptsfromthesaleorinstallationofsolarenergysystems,includingsolarpanels,solarhotwaterheaters,andtrombewalls,aredeductiblefromgrossreceiptsiftheequipmentisusedtogeneratepowerforon‐siteconsumption.


IntendedPurpose: Presumablytoincentivizetheinstallationofandusesolarenergysystemsattheconsumerlevel.


Evaluation: ThesteadygrowthrateinTRD’sestimateddeductionutilizationsuggeststhatthisdeductioncontinuestobenefitsolarpurchasers.


ReliabilityFactor: 3‐Thesolarmarketdevelopmentcredit,authorizedinSection7‐2‐18.14NMSA1978,isusedasaproxytoestimatethesizeofthisdeduction.Averagegrowthrateswereusedtoestimate2013through2016impacts.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $1,830.0 $1,930.0 $2,000.0 $2,100.0 $2,200.0 $2,600.0

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0


SolarEnergySystemsDeduction


SOLARMARKETDEVELOPMENTCREDITAGAINSTPIT


BriefDescription: Taxpayerswhopurchaseandinstallasolarthermalsystemoraphotovoltaicsysteminaresidence,business,oragriculturalenterpriseownedinNewMexicomayapplyforasolarmarketdevelopmenttaxcreditofupto10%ofthepurchaseandinstallationcostofthesystemagainsttheirPIT.ThispurchasemustbemadeafterJanuary1,2006butbeforeDecember31,2016.

Thecreditshallnotexceed$9,000.Themaximumaggregateamountofcreditsallowedinanytaxyearis$2millionforsolarthermalsystemsand$3millionforphotovoltaicsystems.

Thecreditisnotrefundablebutmaybecarriedforwardforuptotenyears.


IntendedPurpose: PresumablytoincentivizethegrowthofthesolarindustrybysubsidizingaportionofthepurchaseandinstallationcostsofsolarsystemsinNewMexico.


Amendedin2009toreducethecreditfrom30%to10%andremovethecumulativefederalandstatecapof30%.

Evaluation: Aplausibleexplanationforthesteadyincreaseinthenumberandsizeofclaimsandtherelativeplateauoverthelastthreefiscalyearsmayindicatethatthesolarmarketisbeginningtomature.Assumingthatthenumberofclaimscorrespondstothenumberofsystems,5,675systemswereinstalledbetweenFY2010andFY2014atatotalfive‐yearexpenditurecostof$11,649,400,whichatthe10%ofcostcreditallowance,reflects$116,494,000indirecteconomicactivitywithrespecttosolarinstallers.AsTRDdoesnotcollectinformationregardingindividualsystemsandsystemcapacity,theenergycostsavingscannotyetbedetermined.

Recommendations: (1)TheprogramexpiredDecember31,2016.Iftheprogramisextended/renewed,thenamendmentsshouldbeconsideredtoindicatewhichbusinessinstallationsqualifyforthecredit,asthereistensionbetweenbusinesseseligibilityandthestatutoryineligibilityforcommercialorindustrialuse.

(2)Thestatuteshouldexpresslyrequirethepowerbeusedprimarilyforon‐siteconsumption.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $2,242.5 $2,651.5 $2,832.1 $2,671.3 $2,583.8

Claims 1,014 1,231 1,362 1,367 1,386

0

200

400

600

800

1,000

1,200

1,400

1,600

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

PIT(thousands)

SolarMarketDevelopmentCredit


SPACEPORT‐RELATEDACTIVITIESGRTDEDUCTION


BriefDescription: DeductiblefromGRTarereceiptsfrom:

(1) launching,operatingorrecoveringspacevehiclesorpayloads;

(2) preparingapayload; (3) operatingaspaceport;or

(4) providingresearch,development,testing,andevaluationservicesfortheU.S.AirForceOperationallyResponsiveSpaceProgram.


IntendedPurpose: PresumablytoencouragethedevelopmentofthespaceindustryinNewMexico.

History: Originallyenactedin1995andamendedin1997,2001,2003,and2007.The2007amendmentaddedadeductionforreceiptsfromtheprovisionofresearch,development,testing,andevaluationservicesfortheU.S.AirForceOperationallyResponsibleSpaceProgram.

Evaluation: None.


ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.Previouslythisestimateallowedforconstructionactivitiestobededucted.Thoseactivitiesarenotavaliddeductionandhavenotbeenincludedthisyear.



SPACE‐RELATEDTESTARTICLESDEDUCTIONFROMCOMPENSATINGTAX


BriefDescription: Thevalueofspace‐relatedtestarticlesusedinNewMexicoexclusivelyforresearchortestingplacedonpublicdisplayafterorstoredforfutureuse.ThevalueofequipmentandmaterialsusedinNewMexicoforresearchortestingtosupporttheresearchortestingofspace‐relatedtestarticles,orforstorageofsuchequipmentormaterialstosupporttheresearchandtestingofspace‐relatedtestarticles,isdeductibleincomputingcompensatingtaxdue.


IntendedPurpose: PresumablytoincentivizethedevelopmentofthespaceindustryinNewMexico.


Evaluation: Accordingtopubliclyavailableinformation,currentlyonlyonecompanywiththeexplicitgoalofconductingspace‐relatedtestingoperatesinNewMexico.Thecompanyperformsperhapsonelaunchayear.Threecompanieshaveindicatedadesiretoperformspace‐relatedtestingattheSpaceport;onemadeinvestmentsofapproximately$2million,andanothermoveditsheadquarterstothestate.ThisdeductionmustbeevaluatedinconjunctionwithoverarchingstatepolicywithrespecttoSpaceportAmericasstatus,feasibility,completion,andoperation.





SPECIALNEEDSADOPTEDCHILDCREDITAGAINSTPIT


BriefDescription: Ataxpayerwhohasadoptedaspecialneedschild(anindividualcertifiedasa"difficulttoplacechild")mayclaimacreditagainstPITintheamountof$1,000.

Iftheamountofcreditduetoataxpayerexceedsthetaxpayer'sPITliability,theexcessisrefunded.


IntendedPurpose: Presumablytoprovidetaxreliefforthosewhoadoptedaspecialneedschild.


Evaluation: None.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $1,579.5 $1,667.0 $1,707.0 $1,777.0 $1,761.0

Claims 896 921 936 976 967

840

860

880

900

920

940

960

980

1000

$1,450.0

$1,500.0

$1,550.0

$1,600.0

$1,650.0

$1,700.0

$1,750.0

$1,800.0

PIT(thousands)

SpecialNeedsAdoptedChildCredit


SUSTAINABLEBUILDINGCREDITAGAINSTPITANDCIT


BriefDescription: Enactedin2007,Sections7‐2A‐21and7‐2‐18.19NMSA1978providethesustainablebuildingtaxcredit.Sections7‐2A‐28and7‐2‐18.29NMSA1978,enactedin2015andapplicabletotaxyearsbeginningonorafterJanuary1,2017,providethenewsustainablebuildingtaxcredit.UntilDecember31,2016,ataxpayermayclaimacreditagainstPITandCITforinvestmentsinconstructingorrenovatingsustainableresidentialorcommercialbuildingsthatmeetspecific“green”buildingstandards.

Theamountofthecreditthatmaybeclaimedrangesfrom$0.70persquarefootto$9.00persquarefootdependingonthesquarefootageofthebuilding,thetypeofbuilding,andthecertificationlevelthebuildinghasachievedintheLEEDgreenbuildingratingsystem.

Forcreditsthatarelessthan$100,000,amaximumof$25,000willbeappliedagainstthetaxpayer’sliabilityeachyearasneeded;forcreditsof$100,000andmore,amaximumof25%willbeappliedagainstthetaxpayer’sliabilityeachyear.

Thecreditisnotrefundable,butistransferable.Itmayalsobecarriedforwarduptosevenyears.


IntendedPurpose: Toencouragetheconstructionofsustainablebuildingsandtherenovationofexistingbuildingsintosustainablebuildings.


The2013amendmentextendedtheexpirationdate,changedtheaggregatecapforcommercialbuildingfrom$5millionto$1millionandfrom$5millionto$4millionforresidentialbuildings,andestablishedthresholdsforhowmuchofthecreditcanbeclaimedineachyear.

In2015legislationwaspassedtore‐enactanewsustainablebuildingtaxcredit14,which:(1)providedthenewcreditthrough2026;(2)loweredthequalifiedsquarefootageandcreditamountforresidentialbuildings;and(3)reinstatedaper‐credit(asopposedtoanaggregatedcredit)methodologyfordeterminingannualizedcreditclaimamounts.

Evaluation: AccordingtoEMNRD,thesustainablebuildingtaxcreditreacheditscapinFY2015andFY2016.Inthe12‐monthperiodthroughOctober2013,EMNRDreceived,reviewed,andprocessed1,078applicationscomprising2.7millionsquarefeetoffloorarea,including:sixcommercialbuildingsof

14Sections7‐2‐18.29and7‐2A‐28NMSA1978


663,970squarefeet;216multifamilyhousingunitsof201,763squarefeet;67manufacturedhomesof111,082squarefeet;and795single‐familyhomesof1,787,047squarefeet.TheconstructionofbuildingsthatmeetENERGYSTAR,LEED,orBuildGreenNewMexicostandards,providedjobsin22NewMexicocounties.

TRDuseddataprovidedbyEMNRDinthousandsofBTU’s(BritishThermalUnits)toestimatethesavingsindollaramounts.UsingthePublicServiceCompanyofNewMexico’smonthlyratesperkilowatt‐hour(“kWh”),theDepartmentmonetizedthesavingsinenergyasaresultofthecredit.InFY2014,thetotalsavingsinresidentialhomeswasabout$570,000.Thefutureenergysavingsprojectionsover10yearswereestimatedtobe$27million,comparedto$18millionintaxcredits.Totalsavingsforcommercialbuildingsover10yearswereestimatedat$30million,comparedtoa$2.2millionintaxcredits.Itshouldbenotedthatthemonetizedenergysavingsareannualsavingsanddonotprojectorconsiderthecumulativeenergysavingsovertheusefullifeoftheproperties.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $2,289.1 $4,372.9 $2,549.1 $2,987.6 $2,686.8

Claims 307 429 358 417 473

‐50100150200250300350400450500

$‐$500.0

$1,000.0$1,500.0$2,000.0$2,500.0$3,000.0$3,500.0$4,000.0$4,500.0$5,000.0


SustainableBuildingCredit


TAXSTAMPSRATEDIFFERENTIALINCIGARETTETAX


BriefDescription: TRDsellstaxstampsatfacevaluetodistributorsofcigarettes.Unlessthefacevalueoftaxstampssoldinasinglesaleislessthan$1,000,adiscountof0.55%isappliedforthefirst$30,000ofstampspurchasedinonecalendarmonth.A0.;44%discountisappliedforthenext$30,000ofstampspurchasedinthatmonth,anda0.27%discountisappliedforanystampspurchasedinexcessof$60,000.


IntendedPurpose: Presumably,thisprovidesascaledincreaseofthepriceofstamps.Ratherthanprovidingforafloorwithincreasesatcertainthresholds,itprovidesaceilingwithdecreasesatcertainthresholds.Thismeetsthedefinitionofataxexpenditurebuttheintenttomakeitoneisunclear.

History: Originallyenactedin1943andamendedin1947,1949,1953,1963,1968,1970,1971,1988,2006,and2010.The2010amendmentreducedthediscounts.

Evaluation: None.


ReliabilityFactor: 1‐Thediscountedamountsarereportedseparately.Noestimationisrequired.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $268.8 $249.3 $262.8 $247.8 $260.7 $248.6

Claims 22 19 21 20 21 20

17.51818.51919.52020.52121.52222.5

$235.0

$240.0

$245.0

$250.0

$255.0

$260.0

$265.0

$270.0

$275.0

CigaretteTax(thousands)

TaxStampsRateDifferential


TECHNOLOGYJOBSANDRESEARCHANDDEVELOPMENTCREDITAGAINSTGRT,COMPENSATINGTAX,WITHHOLDINGTAX,PIT,OR

CIT


BriefDescription: AtaxpayerwhoconductsqualifiedresearchanddevelopmentatafacilityinNewMexico,exceptatafacilityoperatedfortheU.S.government,mayclaimabasiccreditequalto5%(4%beforeJanuary1,2016)ofqualifiedexpenditures(thisisdoubledto8%whenthequalifiedfacilityisinaruralarea)againstGRT,compensatingtax,orwithholdingtax.

Thetaxpayermayqualifyforanadditional4%creditagainstPITandCITliabilitiesbyraisingitsin‐statepayrollby$75,000forevery$1millioninqualifiedexpendituresclaimed.Thiscreditdoublesifthequalifiedfacilityisinaruralarea.

A2015amendmentexcludedlocaloptiongrossreceiptstaxfromthetaxesthatthebasiccreditmaybeclaimedagainst.Thelegislationalsorequiredseparatereportingbythetaxpayer.

Qualifiedresearchanddevelopmentsmallbusinessisdefinedasataxpayerthat:

(1)employednomorethanfiftyemployeesasdeterminedbythenumberofemployeesforwhichthetaxpayerwasliableforunemploymentinsurancecoverageinthetaxableyearforwhichanadditionalcreditisclaimed;

(2)hadtotalqualifiedexpendituresofnomorethanfivemilliondollars($5,000,000)inthetaxableyearforwhichanadditionalcreditisclaimed;and

(3)didnothavemorethan50%ofitsvotingsecuritiesorotherequityinterestwiththerighttodesignateorelecttheboardofdirectorsorothergoverningbodyofthebusinessowneddirectlyorindirectlybyanotherbusiness;PriortoJanuary1,2016thecreditisnotrefundablebutmaybecarriedforwardaslongasneeded.

StartingJanuary1,2016thecreditisrefundableifthetaxpayer'stotalqualifiedexpendituresforthetaxableyearforwhichtheclaimismadeis:

(1)lessthan$3million,theexcessadditionalcreditshallberefundedtothetaxpayer;

(2)greaterthanorequalto$3millionandlessthan$4million,two‐thirdsoftheexcessadditionalcreditshallberefundedtothetaxpayer;and

(3)greaterthanorequalto$4millionandlessthanorequalto$5million,one‐thirdoftheexcessadditionalcreditshallberefundedtothetaxpayer.


StatutoryBasis: 7‐9F‐1etseq.NMSA1978

IntendedPurpose: Toincentivizethegrowthoftechnology‐basedbusinessesengaginginresearch,developmentandexperimentationbyprovidingafavorabletaxclimateandtopromoteincreasedemploymentandhigherwagesinthosefieldsinNewMexico.

History: Originallyenactedin2000andamendedin2015,HB2Sections10through18amendedtheTechnologyJobsTaxCreditActtocreatetheTechnologyJobsandResearchandDevelopmentTaxCreditAct.Section7‐9F‐9NMSA1978wasamendedtosetforththemechanismforclaimingthebasiccredit,andtoexcludelocaloptiongrossreceiptstaxfromthetaxesthatthebasiccreditmaybeclaimedagainst.Ataxpayerreportingrequirementwasalsocreated.

Evaluation: TheuseofthistaxcreditincreasedinFY2014.

Recommendations: Raisethevalueofthecreditandmakeitrefundableforsmallbusinessessothatthecreditcanactasastimulanttoqualifyingresearchanddevelopmentactivitiesbythesesmallbusinesses.

ReliabilityFactor: 2–Althoughthiscreditisseparatelyreported,itsreliabilityhasbeentemporarilymovedfrom1to2becauseofacertainissuewithinthereportingmechanism,whichiscurrentlyunderreviewbytheDepartment’sAuditandComplianceDivision(ACD).Therefore,thisexpenditurerequiresanadjustmentbasedonrecommendationprovidedbyACD.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Expenditures $3,168.7 $7,742.0 $8,323.6 $7,007.4 $5,382.6 $4,468.2

Claims 333 275 252 454 497 327

‐

100

200

300

400

500

600

$‐$1,000.0

$2,000.0$3,000.0$4,000.0$5,000.0$6,000.0$7,000.0

$8,000.0$9,000.0


TechnologyJobsCredit


TESTARTICLEDEDUCTIONFROMCOMPENSATINGTAX


BriefDescription: ThevalueoftestarticlesuponwhichresearchortestingisconductedinNewMexicopursuanttoacontractwiththeU.S.DepartmentofDefenseisdeductibleincomputingthecompensatingtaxdue.ThedeductionprovideddoesnotapplytothevalueofpropertypurchasedbyaprimecontractoroperatingafacilitydesignatedasanationallaboratorybyanactofCongress.


IntendedPurpose: PresumablytoincentivizetheretentionofU.S.AirForcebasesinNewMexicobyallowingacompensatingtaxdeductionfortheuseoftestarticlesuponwhichresearchortestingisconductedinNewMexicopursuanttoacontractwiththeU.S.DepartmentofDefense.


Evaluation: None.





TIDD–TAXINCREMENTFORDEVELOPMENTDISTRICTDEDICATEDINCREMENTS


BriefDescription: StateandlocalgovernmentsmaydedicateaportionofGRTincrementsandpropertytaxincrementsforusebyaTIDDtofundeligibleactivitiesoftheTIDD.


IntendedPurpose: TocreateamechanismforprovidingGRTandpropertytaxfinancingforpublicinfrastructuretoincentivizethesupportofeconomicdevelopmentandjobcreation.


The2009amendmentclarifiedthefollowing:thatapprovaloftheplanisbythegoverningbodyofthemunicipalityorcountywithinwhichtheTIDDprojectsareproposed,thatthedepositthepetitionersputdownmaybereimbursedfromtheproceedsfromthesaleofbondsissuedbytheTIDD,todirectthegoverningbodyofthelocalgovernmenttonotifyTRD,DepartmentofFinanceandAdministration,andtheLFCwhenaresolutionisadopted,andtoaddrequirementsforthecontentofthenoticeofhearing,andtoclarifysomeadministrativeprovisions.

The2014amendmentcreatedamechanismforadjustingabaseyearonetime.

Evaluation: TIDDsallowforstateandlocalgovernmentstocontributetaxrevenuetodevelopmentsthataredeemedtobemutuallybeneficial.Administratively,TIDDsrequiregreatcareintheinitialsetupandbaselinesettingstage.Ifthebaselineissetcorrectlyfromthestart,taxpayerlocationmisfilingissuesareeasilycorrectedthroughthenetreceiptsprocess.


ReliabilityFactor: 1–GRTreportingwithinTIDDsarereportedseparately.Noestimationisrequired.InFY15newTIDDsexistedthatwerenotincludedinthe2015report.Theyhavebeenincludethisyear.

FiscalImpact:

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Municipalities $836.1 $1,496.3 $1,414.3 $2,842.3 $1,460.7 $1,936.9 $1,884.3

Counties $97.9 $172.5 $135.6 $641.4 $228.4 $302.7 $294.5

State $436.9 $2,141.9 $2,290.4 $4,803.9 $2,351.8 $3,118.3 $3,033.6

$‐

$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0

TIDD(thousands)

TIDDDedicatedGRTIncrements


URANIUMENRICHMENTPLANTEQUIPMENTDEDUCTIONFROMCOMPENSATINGTAX


BriefDescription: Thevalueofequipmentandreplacementpartsforthatequipmentmaybedeductedincomputingthecompensatingtaxdueifthepersonusestheequipmentorreplacementpartstoenrichuraniuminauraniumenrichmentplant.


IntendedPurpose: PresumablytoincentivizeenrichmentplantstolocateinNewMexico.


Evaluation: Operatingasintended.TheonlycurrentcommercialenrichmentfacilityintheUnitedStatesopenedinNewMexicoadecadeafterthisstatutewasenacted.


ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact



URANIUMHEXAFLUORIDEANDURANIUMENRICHMENTGRTDEDUCTION


BriefDescription: Receiptsfromsellinguraniumhexafluorideanduraniumenrichmentaredeductiblefromgrossreceipts.


IntendedPurpose: PresumablytoincentivizetheuraniumhexafluorideindustryanduraniumenrichmentplantstolocateinNewMexico.

History: Originallyenactedin1999andamendedin2012.The2012amendmentallowedthedeductionforthesaleofuraniumhexafluoride.

Evaluation: None.


ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.Noestimationisrequired.

NOTE:DataforFY2014‐FY2016havebeenredactedduetofewerthan3taxpayerstakingthededuction.Noclaimsotheryears.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $‐ $‐ $‐

$‐

$20.0

$40.0

$60.0

$80.0

$100.0


UraniumHexafluorideandEnrichmentGRTDeductionDatahavebeenredacted


UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESCREDITFROMPIT


BriefDescription: Ataxpayerwhois65yearsofageoroldermayclaimacreditof$2,800formedicalcareexpensespaidbythetaxpayerequalto$28,000ormore,ifthoseexpensesarenotreimbursedorcompensatedforbyinsuranceorotherwise.Thiscreditisrefundableifthecreditexceedstheincometaxliabilityforthetaxableyear.


IntendedPurpose: ToaccommodatetaxpayersbydeductingmedicalexpensesnototherwisereimbursedorcompensatedbyreducingNMtaxableincome.

History: Originallyenactedin2005withnoexpiration.

Evaluation: None.


ReliabilityFactor: 1–Theexpenseiscalculateddirectlyfromtaxpayerdata.Noestimationisrequired.

FiscalImpact:

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $4,088.0 $5,198.2 $5,366.2 $5,868.8 $6,147.4 $5,793.2

Claims 1,463 1,860 1,923 2,101 2,200 2,073

‐

500

1,000

1,500

2,000

2,500

$‐

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

PIT(thousands)

UnreimbursedMedicalCareExpenseCredit


UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESDEDUCTIONFROMPIT


BriefDescription: Ataxpayermayclaimadeductionfromnetincomeanamountdeterminedformedicalcareexpensespaidduringthetaxyearformedicalcareofthetaxpayer,thetaxpayer’sspouseordependent(s)iftheexpensesarenotreimbursedorcompensatedforbyinsuranceorotherwise.



History: Originallyenactedin2005.ThisdeductionhasasunsetprovisionofJanuary1,2025.

Evaluation: Thisisoneofseveralcitizenbenefitexpendituresrelatedtounreimbursedmedicalexpenses.Thisprogramisavailabletoalltaxpayers,subjecttopercentagesdeterminedbyadjustedgrossincomethresholds.Onaverageapproximately30%oftaxpayersusethisbenefit.


ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.

FiscalImpact:

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $2,664.0 $2,736.0 $2,873.0 $3,063.0 $3,286.0 $3,283.0

Claims 315,472 315,251 320,120 315,013 318,418 322,585

200,000

220,000

240,000

260,000

280,000

300,000

320,000

$‐

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

PIT(thousands)

UnreimbursedMedicalCareExpenseDeduction


UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESEXEMPTIONFROMPIT


BriefDescription: Anyindividualwhois65yearsoroldermayclaimanadditionalexemptionfromnetincomeinanamountequalto$3,000formedicalcareexpensespaidduringthetaxableyearifthosemedicalexpensesexceed$28,000andarenotreimbursedorcompensatedbyinsuranceorotherwise.Medicalexpensescouldbefortheindividual,theindividual’sspouse,ortheindividual’sdependents.



History: Thisexemptionwasenactedin2005anddoesnothaveasunsetprovision

Evaluation: Thisisoneofseveralcitizenbenefitexpendituresrelatedtounreimbursedmedicalexpenses.


ReliabilityFactor: 1–Thisexpenditureiscalculateddirectlyusingtaxpayerdata.Noestimatingisrequired.

FiscalImpact:

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $50.0 $73.0 $86.0 $100.0 $115.0 $106.0

Claims 1,736 2,414 2,643 2,790 2,815 2,765

‐

500

1,000

1,500

2,000

2,500

3,000

$‐

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

PIT(thousands)

UnreimbursedMedicalCareExpenseExemption


VEHICLESTITLEDBEFOREJULY1,1991EXEMPTIONFROMLVGRT


BriefDescription: ReceiptsfromleasingbytheownerofvehiclesthatwereacquiredbytheownerpriortoJuly1,1991areexemptfromtheLVGRTaslongastheMVXwaspaidandacertificateoftitlewasissuedpriortoJuly1,1991.


IntendedPurpose: Presumablytoavoidretroactivityoftaxesonvehiclestitledbeforetheenactmentdate.


Evaluation: Themajorityofleasesare3yearsandarefornewvehicles.Thelikelihoodthatsomeonewouldleasea25yearoldcarisverylowduetoitsageandhighmileageunlesstheyarebeingleasedasvintagevehicles.

Recommendations: Repeal.Atthispointintimetheexemptionappliestoveryfew,ifany,vehicles.

ReliabilityFactor: TRD’sinternaldatabasedoesnothaverecordsofleasesonvehicleswhichweretitledbeforeJuly1,1991.



VENTURECAPITALINVESTMENTCREDITAGAINSTPIT


BriefDescription: AtaxpayermayclaimacreditagainstPITliabilityequaltoacapitalgaintaxdifferential(typically50%ofthefederalincometaxpaidbythetaxpayeronqualifieddiversifyingbusinessnetcapitalsgains)ifthetaxpayerallocatesthequalifieddiversifyingbusinessnetcapitalgaintoNewMexico.

Thecreditisnotrefundablebutmaybecarriedforwardindefinitely.

StatutoryBasis: 7‐2D‐8.1NMSA1978

IntendedPurpose: Presumablytoencouragestrategicadvancesofthecurrentbusinesstofacilitateexplorationsofpotentialnewbusinesses.


Evaluation: Thiscreditisnotbeingclaimed.

Recommendations: Thiscreditappearstomirrorthenetcapitalgainincomededuction,anditsuseisprecludedifthenetcapitalgaindeductionistaken.Astudytodeterminewhythecreditisunusedisrecommended.Recommendrepealingthecredit.

ReliabilityFactor: 1‐Thiscreditisrequiredtobeseparatelyreported.Noestimationisrequired.

FiscalImpact: Notaxpayershaveclaimedthiscredit.


VETERANEMPLOYMENTCREDITAGAINSTPITANDCIT


BriefDescription: AtaxpayerwhoemploysaqualifiedmilitaryveteraninNewMexicoiseligibleforacreditagainstthetaxpayer'sPITandCITliabilitiesinanamountupto$1,000ofthegrosswagespaidduringthetaxableyearforwhichthereturnisfiledforeachmilitaryveteranwhoishiredwithintwoyearsofbeinghonorablydischarged,whoworksatleast40hoursperweek,andwhowasnotpreviouslyemployedbythetaxpayerpriortothedeployment.

Thecreditcanonlybeclaimedforoneyearperindividualveteran.

Thecreditisnotrefundablebutmaybecarriedforwardforthreeyears.

ApplicabletotaxableyearsbeginningJanuary1,2012andendingJanuary12017.


IntendedPurpose: Toencouragethefull‐timeemploymentofqualifiedmilitaryveteranswithintwoyearsofdischargefromthearmedforcesoftheUnitedStates.


Evaluation: Thecreditisunderutilized.Possibleexplanationsarethattaxpayersareunawareofthecreditorthecreditistoosmalltoincentivizethehiringofqualifiedveterans.



FiscalImpact: NOTE:DataforFY2011andFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Noclaimsotheryears.

FY2011 FY2012 FY2013 FY2014 FY2015

CombinedTaxes $‐ $‐ $‐

0

20

40

60

80

100


VeteranEmploymentCreditDatahavebeenredacted


WELFARE‐TO‐WORKCREDITAGAINSTPITANDCIT


BriefDescription: PriortoJanuary1,2008,certainbusinesses,locatedinmostlyruralcounties,thatqualifiedforthefederalwelfare‐to‐workcreditprovidedby26USC§51A,mayalsohavebeeneligiblefortheNewMexicowelfare‐to‐workcreditagainstPITandCIT.BeginningJanuary1,2008,26USC§51Awasrepealedandreplacedbyfederalworkopportunitycredit.EmployersqualifyingforthenewfederalworkopportunitycreditwillnotqualifyfortheNewMexicocredit.

Thecreditmaybecarriedforwardforuptothreeyears.


IntendedPurpose: Presumablytoencouragebusinessestohireemployeeswhohavebeenlong‐termfamilyassistancerecipientsandwhoresideinhigh‐unemploymentcounties.


Evaluation: Thiscreditisrarelyused.Nowthatthefederalprogramtowhichthiscreditwastiednolongerexists,taxpayersareabletoclaimthiscredittotheextentthatataxpayereithercarriedforwardthecreditoramendedareturnforactivitythathappenedwhilethefederalcreditwasstillineffect.Presumablythisaccountsforthelackofactivitysincethecreditexpired.

Recommendations: Repeal.Thiscreditistiedtoafederalprogramthatnolongerexists,andthus,thiscredithasnoeffect.


NOTE:DataforFY2011andFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Therehavebeennoclaimssince2012forthereasonsstatedabove.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

CombinedTaxes $‐ $‐ $‐ $‐

0

20

40

60

80

100


Welfare‐to‐WorkCreditDatahavebeenredacted


WINDANDSOLARGENERATIONEQUIPMENTGRTDEDUCTION


BriefDescription: Receiptsfromsellingwindgenerationequipmentorsolargenerationequipmenttoafederalorstategovernmentoragencyforthepurposeofinstallingawindorsolarelectricgenerationfacilityaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoincentivizethedevelopmentofwindandsolarenergysources.


Amendedin2010toexpandthedeductiontoincludesolargenerationequipment.

Evaluation: None.





WORKINGFAMILIESCREDITAGAINSTPIT


BriefDescription: IndividualsmayclaimacreditagainstPITequalto10%oftheirfederalearnedincometaxcredit.

Thecreditisrefundable.


IntendedPurpose: Presumablytoreducethetaxburdenonworkingfamiliesmakingbelow$51,567(asdefinedbyInternalRevenueCode).


Evaluation: None.



FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015

Expenditures $47,968.1 $49,299.8 $50,338.5 $51,513.4 $51,552.1

Claims 213,788 214,120 214,120 215,020 212,587

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

$46,000.0

$47,000.0

$48,000.0

$49,000.0

$50,000.0

$51,000.0

$52,000.0

PIT(thousands)

WorkingFamiliesCredit


NOTTAXEXPENDITURES

Whilealmostanythingwithrespecttotaxexpenditurescanbedebated,littleargument15surroundsthefollowingdeviationsfromthetaxcode;thereforewearecomfortableclassifyingthemas“NotTaxExpenditures”.

Manyofthesedeviationsfallintooneoftwobroadcategories:1)reducingtheeffectsofpyramidingor2)allowingdeductionsorexemptionsunderonetaxprogrambecausetheLegislaturehaselectedtoimposetaxunderanotherprogram.OneofthedetrimentalimpactsofaGRTsystemisthat,absentadeviation,externalcostsofproductionaretaxedatthetimetheproduceracquiresthemandthenagainwhentheproducersellsthefinalproduct.Whencomparedtoasalestaxsystem,thismakesthecostofagoodorservicemoreexpensiveevenwhenallfactorsotherthanthetypeoftaxsystemareequal.ManyofthedeductionsinNewMexico’sGRTaredesignedtoeliminatethetaxationontheinputssothatthetaxisonlyappliedtothefinalproduct.

Furthermore,NewMexicopolicymakershavedecidedtousedifferenttaxstructurestotaxdifferentactivities(e.g.,MVXforthesaleofmotorvehicles).Deviationsfromonestructurewhentheactivityistaxedunderadifferentstructure(e.g.,GRTdeductionforthesaleofmotorvehicles)preventdoubletaxation.

Severalotherdeviationsareinthecodebecauseofthefederalpreemptiondoctrine.Becausestatesareprohibitedfromtaxingthefederalgovernment,NewMexicoisunabletoimposeataxinthesecasesregardlessofwhetherthedeviationwasplacedinthecode.IncludingitsimplyprovidessomemeasureofclaritytothetaxpayerandtheTaxationandRevenueDepartment.

InformationaboutthiscategoryisnotspecificallyrequiredbyExecutiveOrder2011‐071.However,wehaveincludedsomedescriptiveinformationabouttheminordertogivethereaderamorecompletepictureoftheNewMexicotaxlandscape.

15Notethatthisisintentionallydifferentfromsayingthat“thereisnoargument”;judgmentcallsareaninherentfeatureoftaxexpenditureanalysisandtheeconomistsattheNewMexicoTaxationandRevenueDepartmenthaveusedtheirbestjudgementindeterminingwhatisandwhatisnotataxexpenditure.


ACCREDITEDDIPLOMATSANDMISSIONSGRTDEDUCTION

BriefDescription: Receiptsfromthesaleorleaseofpropertyto,orfromperformingservicesfor,accreditedforeignmissionsordiplomatsaredeductiblefromgrossreceiptswhenrequiredbyatreatytowhichtheU.S.Governmentisasignatory.


IntendedPurpose: Presumablytocomplywiththepreemptiondoctrine.


ACQUISITIONOFVEHICLEFORSUBSEQUENTLEASEEXEMPTIONFROMMVX

BriefDescription: ApersonwhoacquiresavehicleforsubsequentleaseisexemptfromtheMVXif:

(1) thepersondoesnotusethevehicleinanymannerotherthanholdingitforleaseorsaleorleasingorsellingitintheordinarycourseofbusiness;

(2) theleaseisforatermofmorethan6months;

(3) thereceiptsfromthesubsequentleasearesubjecttoGRT;and

(4) thevehicledoesnothaveagrossvehicleweightofover26,000pounds.

StatutoryBasis: 7‐14‐6(F)NMSA1978

IntendedPurpose: PresumablytodefinethetaxbaseandavoidpyramidingasthereisarequirementthesubsequentleasebesubjecttoGRT.

History: Thesectionwasoriginallyenactedin1988andwasamendedin1990,1994,2004,and2007.Thelanguageinthissubsectionwasaddedaspartoftheamendmentin1994.


ACQUISITIONOFVEHICLEMORETHAN30DAYSBEFOREMOVINGTONM

EXEMPTIONFROMMVX

BriefDescription: Apersonwhoacquiresavehicleoutofstatethirtyormoredaysbeforeestablishingadomicileinthisstateisexemptfromthetaxifthevehiclewasacquiredforpersonaluse.

StatutoryBasis: 7‐14‐6(A)NMSA1978

IntendedPurpose: Presumablytoeliminateanunreasonabletaxburdenonnon‐residentsrelocatingtoNewMexicoonpersonallyownedandoperatedvehicles.


ATHLETICFACILITYSURCHARGEEXEMPTIONFROMGRTANDGGRT

BriefDescription: ExemptedfromtheGRTandfromtheGGRTarethereceiptsofauniversityfromanathleticfacilitysurchargeimposedpursuanttotheUniversityAthleticFacilityFundingAct.


IntendedPurpose: Presumablytoavoidtaxationundermultipleprograms.BecausetheUniversityAthleticFundingActallowsauniversitytoimposeanathleticfacilitysurchargeonproductsandservicessoldatorrelatedtothefacility,thisexemptsthosesalesfromtheGRTandGGRTsothattheyarenottaxedtwice.

History: Originallyenactedin2007aspartofthelegislationthatenactedtheUniversityAthleticFacilityFundingAct.


BADDEBTSDEDUCTIONFROMITGRT

BriefDescription: RefundsandallowancesmadetobuyersofinterstatetelecommunicationsservicesoramountswrittenoffthebooksasanuncollectibledebtbyapersonreportingITGRTonanaccrualbasisaredeductiblefrominterstatetelecommunicationsgrossreceipts.

Ifdebtsreportedasuncollectiblearesubsequentlycollected,thereceiptsmustbeincludedininterstatetelecommunicationsgrossreceiptswhentheyarecollected.

StatutoryBasis: 7‐9C‐9NMSA1978

IntendedPurpose: Presumablytoproperlydefinethetaxbaseandavoidrequiringataxpayertopaytaxesonnon‐existentreceipts.


BIODIESELFORSUBSEQUENTBLENDINGORRESALEBYARACKOPERATORDEDUCTIONFROMPETROLEUMPRODUCTSLOADING

FEEBriefDescription: BiodieselloadedinorimportedintoNewMexicoanddeliveredtoarack

operatorforsubsequentblendingorresalebyarackoperatorisdeductiblefromgallonsusedtodetermineloadsforthepurposesofcalculatingthepetroleumproductsloadingfee.


IntendedPurpose: Presumablytoreducetaxpyramiding.

History: Thesectionwasoriginallyenactedin1990.Thissubsectionwascreatedbyanamendmentin2014.


BOATSEXEMPTIONFROMGRTANDCOMPENSATINGTAX

BriefDescription: Boththereceiptsfromselling,andtheuseof,boatsonwhichanexcisetaxisimposedareexemptfromtheGRTandthecompensatingtax.

StatutoryBasis: 7‐9‐22.1and7‐9‐23.1NMSA1978

IntendedPurpose: PresumablytoavoidtaxationundermultipleprogramsastheseexemptionsonlyapplytothoseboatsonwhichataxisimposedpursuanttoSection66‐12‐6.1NMSA1978.


BUSINESSLOCATEDONLANDOWNEDBYTHEMUNICIPALITYBUTOUTSIDETHEMUNICIPALBOUNDARIES

EXEMPTIONFROMSUPPLEMENTALMUNICIPALGRTANDMUNICIPALLOCALOPTIONGRT

BriefDescription: AbusinesslocatedoutsideoftheboundariesofamunicipalityonlandownedbythatmunicipalityisexemptfromthesupplementalmunicipalGRTandthemunicipallocaloptionGRT.

StatutoryBasis: 7‐19‐14(B)and7‐19D‐5(B)NMSA1978

IntendedPurpose: Presumablytoresolveajurisdictionalquestionandprovidecertaintyaboutthetaxratethatappliesinthissituation(withoutthisclarification,therecouldbeargumentsaboutwhichtaxrateapplies).



CERTAINRETAILSALESOFGASOLINEONANINDIANRESERVATION,PUEBLOGRANTORTRUSTLAND

DEDUCTIONFROMGASOLINETAX

BriefDescription: ApersonmaydeductapercentageequaltotheratetheIndiannation,tribe,orpueblochargesdividedbytheratethestatechargesfromthegasolinegallonsreceivedthataresoldatretailonIndiannation,tribe,orpuebloland.


IntendedPurpose: Presumablytoaddressmulti‐jurisdictionaltaxationasthedeductionmayonlybetakeniftheIndiannation,tribe,orpueblohascertifiedthatithasineffectanexcise,privilege,orsimilartaxongasoline.


CHARITABLEORGANIZATIONSEXEMPTIONFROMPIT

BriefDescription: Religious,educational,benevolent,orotherorganizationsnotorganizedforprofitwhichareexemptfromincometaxationundertheInternalRevenueCodeareexemptfromPITandCIT;however,PITandCITapplytotheunrelatedbusinessincomeoftheorganization.

StatutoryBasis: 7‐2‐4(B)and7‐2A‐4(C)NMSA1978

IntendedPurpose: Presumablytodefinethetaxbase.

History: ThePITexemptionwasoriginallyenactedin1965andamendedin1969,1971,and1981.

TheCITexemptionwasoriginallyenactedin1981andamendedin1986and1989.


CHEMICALSANDREAGENTSGRTDEDUCTION

BriefDescription: Receiptsfromsellingchemicalsorreagentstoanymining,milling,oroilcompanyforuseinprocessingoresoroilinamill,smelter,orrefineryorinacidizingoilwells,andreceiptsfromsellingchemicalsorreagentsinlotsinexcessofeighteentonsaredeductiblefromgrossreceipts.




CONSTRUCTIONMATERIALGRTDEDUCTION

BriefDescription: Receiptsfromsellingconstructionmaterialaredeductiblefromgrossreceiptsifthesaleismadetoapersonengagedintheconstructionbusiness.

Thebuyermustpresentanontaxabletransactioncertificatetothesellerandincorporatetheconstructionmaterialas:

(1) aningredientorcomponentpartofaconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;

(2) aningredientorcomponentpartofaconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or

(3) aningredientorcomponentpartofaconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribeorpueblo.





CONSTRUCTIONSERVICESANDCONSTRUCTION‐RELATEDSERVICEGRTDEDUCTION

BriefDescription: Receiptsfromsellingaconstructionserviceoraconstruction‐relatedservicearedeductiblefromgrossreceiptsifthesaleismadetoapersonengagedintheconstructionbusiness.

Thebuyermustpresentanontaxabletransactioncertificatetothesellerandhavetheconstructionservicesorconstruction‐relatedservicesdirectlycontractedfororbilledto:

(1) aconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;

(2) aconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or

(3) aconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribeorpueblo.



History: Originallyenactedin1969andamendedin2000and2012.The2012amendmentincludedthedeductionforconstructed‐relatedservices.

DIVIDENDSANDINTERESTEXEMPTIONFROMGRT

BriefDescription: Interestonmoneyloanedordeposited;dividendsorinterestfromstocks,bonds,orsecurities;andreceiptsfromthesaleofstocks,bonds,orsecuritiesareexemptfromGRT.Thisexemptionexistsbecausetheabovearetaxedunderthepersonalincometax.


IntendedPurpose: Presumablyenactedasabasedefiningmeasure.



DYEDGASOLINEUSEDFOROFF‐ROADTRANSPORTATIONDEDUCTIONFROMGASOLINETAX

BriefDescription: GasolinethatisdyedinaccordancewithTRDregulationsandisnotusedinmotorvehiclesoperatingonthehighwaysofNewMexicoisdeductiblefromthegasolinetaxbutissubjecttoGRT.


IntendedPurpose: Presumablytorecognizethatoff‐roadvehiclesdon’tcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthegasolinetaxdistributionstotheStateRoadFund.

History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.

Thelanguageinthissubsectionwascreatedbyanamendmentin1998.

DYEDSPECIALFUELDEDUCTIONFROMSPECIALFUELEXCISETAX

BriefDescription: Specialfuelsdyedinaccordancewithfederalregulationsaredeductiblefromthespecialfuelexcisetax.

StatutoryBasis: 7‐16A‐10(E)NMSA1978

IntendedPurpose: Presumablytorecognizethatoff‐roadvehiclesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthespecialfuelexcisetaxdistributionstotheStateRoadFund.

History: Thissectionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.


EVENTCENTERSURCHARGEEXEMPTIONFROMGRTANDGGRT

BriefDescription: Receiptsfromsellingtickets,parking,souvenirs,concessions,programs,advertising,merchandise,corporatesuitesorboxes,broadcastrevenues,andallotherproductsorservicessoldatorrelatedtoamunicipaleventcenteronwhichaneventcentersurchargeisimposedpursuanttotheMunicipalEventCenterFundingActareexemptfromGRTandGGRT.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprogramsasthereceiptshavetobesubjecttoaneventcentersurchargeinordertobeexempt.

History: Originallyenactedin2005aspartofthelegislationthatenactedtheMunicipalEventCenterFundingAct.

Evaluation: TheMunicipalEventCenterFundingActprovidesanadditionalmethodofaccessingthecapitalmarketstomeettheneedforacompletefundingpackageforfunctionalandmodernmunicipaleventcenters.BecausetheMunicipalEventCenterFundingActallowsamunicipalitytoimposeaneventcentersurchargeonproductsandservicessoldatorrelatedtothestadium,theseexemptionsfromtheGRTandGGRTpreventthemfrombeingtaxedtwice.

FILMSANDTAPESGRTDEDUCTION

BriefDescription: Receiptsfromleasingtheatricalandtelevisionfilmsandtapestomovietheatersorsimilarfacilitieswhenthetheater'sreceiptsaresubjecttoGRTaredeductiblefromgrossreceipts.





FOODSTAMPS/SNAPEXEMPTIONFROMGRT

BriefDescription: ReceiptsofretailersfromtheredemptionoffoodstampsareexemptfromGRT.


IntendedPurpose: ThisprogramisnotconsideredataxexpenditurebecauseoftheCodeofFederalRegulationsTitle7,SubtitleB,ChapterIIC,§278.2prohibitsthestatefromtaxingfoodpurchasedwithSNAPcoupons.Thestatute’sintendedpurposeispresumablytolowerthecostoffoodforthosewhoqualifyforandusefoodstamps(akaSupplementalNutritionAssistanceProgramor“SNAP”).


Evaluation: Presumablytocomplywiththefederalpreemptiondoctrine.ThisexemptiononlyapplieswhenaSNAPrecipientdoesnotbuyfoodfromoneof1,541qualifiedSNAPpointsofsaleinthestate.Becauseofthis,theestimatedamountsforthisexemptionarerelativelysmallwhencomparedtothetotalamountofSNAPexemptions,asreportedbyHSD.


ReliabilityFactor: 3–UsingexpenditureandcasenumberdatafromHSDbetweenFY2011andFY2016,theannualaverageGRTratewasappliedtotheannualdollaramountsofSNAPexpenditures.ToestimatetheamountsoftheseexpendituresTRDassumedamaximumexemptionrateof9%startinginFY2010anda4%exemptionrateendinginFY2014.ThisexemptionapplieswhenSNAPbenefitsareusedtopurchasefoodfromaqualifiedretailfoodstore.Therefore,receiptsunderSection7‐9‐92NMSA1978maynotbedeductediftheyareexemptedbySection7‐9‐18.1NMSA1978.

FiscalImpact:

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

GRT $3,800.0 $3,700.0 $3,300.0 $2,600.0 $2,300.0 $1,900.0

$‐$500.0

$1,000.0$1,500.0$2,000.0$2,500.0$3,000.0$3,500.0$4,000.0


FoodStamps(SNAP)Exemption


FUELEXEMPTIONFROMGRTANDCOMPENSATINGTAX

BriefDescription: Thesellingandtheuseofgasoline,specialfuel,oralternativefuelonwhichthetaximposedbyotheractshavebeenpaidareexemptfromGRTandcompensatingtax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprogramsasthefuelsmustbetaxedpursuanttothegasolinetax,thespecialfuelexcisetax,ortheAlternativeFuelTaxActinordertoqualifyfortheexemption.


GASOLINEORSPECIALFUELSRETURNEDTOTHEREFINERASUNCOLLECTIBLE

DEDUCTIONFROMPETROLEUMPRODUCTSLOADINGFEE

BriefDescription: Gasolineandspecialfuelsthatarereturnedtotherefiner,pipelineterminaloperator,ordistributoraredeductiblefromthegallonsusedtodetermineloadsforpurposesofcalculatingthePPLFwhenrefundsandallowancesaremadetobuyersforthereturnedfuel.

Gasolineandspecialfuels,thepaymentforwhichhasnotbeencollectedandhasbeendeterminedtobeuncollectible,aredeductiblefromthegallonsusedtodetermineloadsforpurposesofcalculatingthePPLF.

StatutoryBasis: 7‐13A‐5(A)NMSA1978

IntendedPurpose: Presumablytoensurethattaxesarenotpaidongasolineandspecialfuelwhichthetaxpayerisunabletomarket.



INCOMEALLOCATIONANDAPPORTIONMENTCREDITAGAINSTCIT

BriefDescription: NetincomeofanytaxpayerhavingincomethatistaxablebothwithinandwithoutthisstateshallbeapportionedandallocatedpursuanttotheUniformDivisionofIncomeforTaxPurposesAct.


IntendedPurpose: PresumablytopreventNewMexicofromtaxingincomethatisproperlyattributedtoanotherstatepertheU.S.CommerceClause.


INDIANSEXEMPTIONFROMPIT

BriefDescription: IncomeearnedbyamemberofaNewMexicofederally‐recognizedIndiannation,tribe,bandorpueblo,themember’sspouseordependent,whoisamemberofaNewMexicofederally‐recognizedIndiannation,tribe,bandorpueblo,isexemptfromPITiftheincomeisearnedfromworkperformedwithinandthemember,spouseordependentliveswithintheboundariesoftheIndianmember'sorthespouse'sreservationorpueblograntorwithintheboundariesoflandsheldintrustbytheU.S.forthebenefitofthememberorspouseorhisnation,tribe,bandorpueblo,subjecttorestrictionagainstalienationimposedbytheU.S..


IntendedPurpose: PresumablytocomplywithfederalrestraintsonstatetaxationunderfederalIndianlaw.Duringtaxyear2014approximately$624millionofIndianIncomewasexemptfromNMtaxation.Theamountoftaxnotcollectedforfederalcomitywasapproximately$1.5million.



INSURANCECOMPANIESEXEMPTIONFROMCIT

BriefDescription: InsurancecompaniesthatpayapremiumtaxtothestateareexemptfromCIT.


IntendedPurpose: Presumablytoavoidtaxationundermultipleprogramsasqualificationfortheexemptionisdependentuponpayingapremiumtax.


INTERGOVERNMENTALCOALSEVERANCECREDITAGAINSTCOALSEVERANCETAX

BriefDescription: ApersonwhoseverscoalfromtriballandmayclaimacreditagainstthecoalseverancetaxandthecoalsurtaximposedunderSection7‐26‐6NMSA1978.

Thecreditiscalculatedmonthlyandisequalto75%ofthelesserof:

(1) theaggregateamountoftaxesineffectonMarch1,2001imposedbytheIndiannation,tribe,orpueblo;or

(2) theaggregateamountofcoalseverancetaxandthecoalsurtaxduetoNM.


IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannation,tribes,andpueblosandaddressissueswithmulti‐jurisdictionaltaxation.



INTERGOVERNMENTALCREDITAGAINSTCIT

BriefDescription: AnewbusinesswhichopensonIndianlandafterJuly1,1997mayclaimacreditagainsttheCIT.

Thecreditiscalculatedforeachreportingperiodandisequalto50%ofthelesserof:

(1) theaggregateamountoftaxpaidbythetaxpayer;or

(2) theamountofthetaxpayer’sCITduefromthenewbusiness’activityonIndianland.


IntendedPurpose: Presumablytoaccommodateprinciplesoffairapportionmentbetweenthetribesandthestate.



INTERGOVERNMENTALPRODUCTIONANDINTERGOVERNMENTALPRODUCTIONEQUIPMENTCREDITAGAINSTOILANDGAS

SEVERANCETAX,OILANDGASCONSERVATIONTAX,OILANDGASEMERGENCYSCHOOLTAX,ANDOILANDGASADVALOREM

PRODUCTIONTAXBriefDescription: Apersonwhoseversproductsfromtriballandmayclaimacreditagainst

theoilandgasseverancetax,theoilandgasconservationtax,theoilandgasemergencyschooltax,ortheoilandgasadvaloremproductiontax.



(2) theaggregateamountofoilandgasseverancetax,theoilandgasconservationtax,theoilandgasemergencyschooltax,ortheoilandgasadvaloremproductiontaxduetoNM.

ApersonwhoisliableforthepaymentoftheoilandgasproductionequipmentadvaloremtaximposedonequipmentlocatedonIndiantriballandmayclaimacredit.



(2) theaggregateamountofoilandgasproductionequipmenttaxduetoNM.


IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannations,tribes,andpueblosandtoaddressthecumulativetaxburdenofmultijurisdictionaltaxation.



INTERNETSERVICESGRTDEDUCTION

BriefDescription: Receiptsfromprovidingtelecommunications,Internet,orInternetaccessservicestointernetserviceprovidersaredeductible.


IntendedPurpose: PresumablytoreducetaxpyramidingasthefinalusermustbesubjecttotheGRTorITGRT.


INTERSTATESALESOFSPIRTUOUSLIQUORS,BEER,&WINEANDWINEGROWER‐TO‐WINEGROWERTRANSFERS

DEDUCTIONFROMLIQUOREXCISETAX

BriefDescription: Awholesalerwhosellsandshipsliquor,beer,orwineoutofstatemayclaimadeductionforthoselitersfromtheunitsofalcoholicbeveragessubjecttotheliquorexcisetax.

Awinegrowerwhotransferswinetoanotherwinegrowerforprocessing,bottling,orstorageandsubsequentlyreturnsthewinetotheoriginalwinegrowermayclaimadeductionforthoselitersfromtheunitsofwinesubjecttotheliquorexcisetax.


IntendedPurpose: PresumablytoincreaseNewMexicowinegrowers’competitivenessinotherstateswithrespecttotheout‐of‐statedeductionandtoensurethattheproductisnottaxedtwice(onceinNewMexicoandonceintheotherstate);andtoreducetaxpyramidingwithrespecttothewinegrower‐to‐winegrowertransfers.



INTERSTATESALESOFTOBACCODEDUCTIONAGAINSTTOBACCOPRODUCTSTAX

BriefDescription: ThevalueoftobaccoproductssoldandshippedorgivenandshippedtoapersoninanotherstateisdeductiblefromtheproductvaluesubjecttotaximposedbytheTobaccoProductsTaxAct.


IntendedPurpose: Presumablytoensurethattheproductisnottaxedtwice(onceinNewMexicoandagainintheotherstate).


INTERSTATETELECOMMUNICATIONSSERVICESEXEMPTIONFROMGRT

BriefDescription: ReceiptsfromsellingorprovidinginterstatetelecommunicationsservicesthataresubjecttoITGRTareexempt


IntendedPurpose: PresumablytoavoidtaxationundermultipleprogramsastheexemptiononlyappliestothesaleorprovisionofinterstatetelecommunicationsservicessubjecttothetaximposedbytheInterstateTelecommunicationsGrossReceiptsTaxAct16.


INTERSTATECOMMERCETRANSACTIONSDEDUCTIONFROMLVGRT

BriefDescription: ReceiptsfromtransactionsininterstatecommercearedeductiblefromgrossreceiptstotheextentthattheimpositionoftheleasedvehiclegrossreceiptstaxwouldbeunlawfulundertheUnitedStatesConstitution.


IntendedPurpose: TocomportwithU.S.ConstitutionallimitationsonstatetaxationundertheCommerceClause.


16Section7‐9C‐1NMSA1978


JEWELRYMANUFACTURINGGRTDEDUCTION

BriefDescription: Receiptsfromsellingtangiblepersonalpropertyaredeductiblefromgrossreceiptsifitisincorporatedasaningredientorcomponentpartofthejewelrythebuyerisinthebusinessofmanufacturing.

Thedeductionallowedasellerunderthissectionshallnotexceed$5,000duringanytwelve‐monthperiodattributabletopurchasesbyasinglepurchaser.


IntendedPurpose: Presumablytoreducetaxpyramidingasthedeductiononlyappliesifthesaleismadetoapersonwhousesthepropertyasaningredientorcomponentpartofthejewelrythebuyermanufactures.


JICARILLAAPACHETRIBALCAPITALIMPROVEMENTSTAXCREDITAGAINSTOILANDGASEMERGENCYSCHOOLTAX

BriefDescription: ApersonwhoisliableforthepaymentoftheoilandgasemergencyschooltaximposedonproductsseveredfromJicarillaApachetriballandshallbeentitledtoacreditagainsttheoilandgasemergencyschooltaxforqualifyingproducts.

Thecreditiscalculatedmonthlyandisequaltothelesserof:

(1) theJicarillaApachetribalcapitalimprovementstax;or

(2) .007%ofthetaxablevalueoftheproductsseveredfromqualifiedwells.


IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannations,tribes,andpueblosandaddressissueswithmulti‐jurisdictionaltaxation.TheJicarillaApachetribalcapitalimprovementstaxisexclusivelydedicatedtofundcapitalimprovementsprojectsonJicarillaApachetriballandandisnotavailabletofinancetheconstructionofbuildingsusedforcommercialactivity.



LEASEFORSUBSEQUENTLEASEGRTDEDUCTION

BriefDescription: Receiptsfromleasingtangiblepersonalpropertyorlicensesusedforsubsequentleaseintheordinarycourseofbusinessaredeductiblefromgrossreceipts.

Thelesseemustprovideanontaxabletransactioncertificatetothelessor.




LEASEOFCONSTRUCTIONEQUIPMENTGRTDEDUCTION

BriefDescription: Receiptsfromleasingconstructionequipmentaredeductiblefromgrossreceiptsiftheleaseismadetoapersonengagedintheconstructionbusiness.

Thelesseemustpresentanontaxabletransactioncertificatetothelessorandusetheconstructionequipmentatthelocationof:

(1) aconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;

(2) aconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or

(3) aconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribe,orpueblo.





NATURALGASALREADYTAXEDEXEMPTIONFROMNATURALGASPROCESSORSTAX

BriefDescription: Thetaxshallnotbeleviedmorethanonceonthesamenaturalgas.


IntendedPurpose: Presumablytoavoiddoubletaxation.


NATURALRESOURCESSUBJECTTORESOURCESEXCISETAXEXEMPTIONFROMGRT

BriefDescription: Receiptsfromthesaleorprocessingofnaturalresourcestheseveranceorprocessingofwhicharesubjecttotheresourcesexcisetaxareexemptfromgrossreceipts.


IntendedPurpose: PresumablytoavoidtaxationundermultipletaxprogramsastheexemptiononlyappliestonaturalresourcestheseveranceofwhicharesubjecttothetaxesimposedbytheResourcesExciseTaxAct.


“NETINCOME”EXEMPTIONSFROMPIT

BriefDescription: Income(intheformofinterest)derivedfromU.S.governmentobligationsisexcludedfromthedefinitionof“netincome”andthereforeexemptfromPIT.

StatutoryBasis: 7‐2‐2(N)NMSA1978

IntendedPurpose: Presumablytocomplywiththepreemptiondoctrine.



NONRESIDENTEXEMPTIONFROMESTATETAX

BriefDescription: Thetransferofthepersonalpropertyofanonresidentisexemptfromtheestatetaxtotheextentthatthepersonalpropertyofresidentsisexemptfromtaxationunderthelawsofthestateinwhichthenonresidentisdomiciled.


IntendedPurpose: Presumablytoreducetheadministrativecommitmentbetweenstates.


OCCASIONALSALEOFPROPERTYORSERVICESEXEMPTIONFROMGRT

BriefDescription: ReceiptsfromtheisolatedoroccasionalsaleorleasingofpropertyoraservicebyapersonwhoisnotinthebusinessofsellingorleasingthesameorsimilarpropertyorserviceareexemptfromGRT.


IntendedPurpose: Presumablytoproperlydefinethetaxbase.


OILANDGASORMINERALINTERESTSEXEMPTIONFROMGRT

BriefDescription: Receiptsfromthesaleorleaseofoil,naturalgas,ormineralinterestsareexemptfromGRT.





ONE‐WAYHAULANDEMPTYTRAVELRATEDIFFERENTIALFROMWDT

BriefDescription: If(1)amotorvehicleiscustomarilyusedforone‐wayhaul,(2)themotorvehicletravelsemptyofallloadforatleast45%ofthemileagetraveledduringaregistrationyear,and(3)theregistrantofthevehiclehasmadeaswornapplication,thetaxistwo‐thirdsofthestandardWDT.


IntendedPurpose: PresumablytoappropriatelytaxvehiclesaccordingtotheirwearandtearonNewMexicoroads.

History: Originallyenactedin1988andamendedin2003(1stSS),and2004.

PERSONALEFFECTSEXEMPTIONFROMCOMPENSATINGTAX

BriefDescription: Theusebyanindividualofpersonalorhouseholdeffectsbroughtintothestateinconnectionwiththeestablishmentbytheindividualofaninitialresidenceinthisstateandtheuseofpropertybroughtintothestatebyanonresidentforhis/herownnonbusinessusewhiletemporarilywithinthisstateareexemptfromcompensatingtax.


IntendedPurpose: PresumablytoavoidataxburdenonanyonerelocatingtoNewMexico.


PETROLEUMPRODUCTSEXPORTEDFORRESALEEXEMPTIONFROMPETROLEUMPRODUCTSLOADINGFEE

BriefDescription: PetroleumproductsthatareeitherloadedintocargotanksinNewMexicoandexportedforresaleandconsumptionoutsideofNewMexicoorareimportedintoNewMexicoandsubsequentlyexportedforresaleandconsumptionoutsideofNewMexicoareexemptfromthePPLF.


IntendedPurpose: PresumablytoproperlydefinethetaxbaseandtheloadingfeetypicallysupportsenvironmentalissuesrelatedtothestorageoffuelinNewMexico.



PROCESSORSTAXPAIDONNATURALRESOURCESEXEMPTIONFROMRESOURCESTAX

BriefDescription: ThetaxablevalueofanynaturalresourcethatisprocessedinNewMexicoandonwhosetaxablevaluetheprocessorstaxispaidisexemptfromtheresourcestax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheprocessorstaxontheprocessednaturalresourcemustbepaidtoqualifyfortheexemption.


PRODUCTSSUBJECTTOOILANDGASEMERGENCYSCHOOLTAXEXEMPTIONFROMGRT

BriefDescription: Unlessthesaleofproductsisfor:(1)subsequentresaleintheordinarycourseofbusiness,(2)consumptionoutsidethestate,or(3)useasaningredientorcomponentpartofamanufacturedproduct,receiptsfromthesaleofproductsareexemptfromGRTwhentheyaresubjecttotheoilandgasemergencyschooltax.

Thestorageoruseofcrudeoil,naturalgasorliquidhydrocarbonsforfuelintheoperationofaproductionunit,asdefinedintheOilandGasEmergencySchoolTaxAct,willnotbesubjecttogrossreceiptstaxorcompensatingtax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheexemptiononlyappliestothoseproductstheseveranceofwhichissubjecttothetaximposedbytheOilandGasEmergencySchoolTaxAct.



PURCHASEFORRESALEEXEMPTIONFROMLOCALLIQUOREXCISETAX

BriefDescription: Purchasesforsaletoretailersforresaleareexemptfromthelocalliquorexcisetax.


IntendedPurpose: Presumablytoreducetaxpyramidinganddefinethetaxbase.


PURCHASEOFUNDYEDGASOLINEFORCERTAINOFF‐ROADUSEREFUNDOFGASOLINETAX

BriefDescription: Apersonusinggasolineintheoperationofaclothescleaningestablishment,instovesorotherappliancesburninggasoline,oroperatorsofaircraftusingaviationgasolineexclusivelyintheoperationofaircraftmaypurchaseundyedgasolineandmayclaimarefundofgasolinetaxpaid.


IntendedPurpose: Presumablytorecognizethattheseactivitiesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthegasolinetaxdistributionstotheStateRoadFund.


PURCHASESBYORONBEHALFOFTHESTATEGRTDEDUCTION

BriefDescription: ReceiptsfromthesaleofpropertyorservicespurchasedbyoronbehalfoftheStateofNewMexicofromfundsobtainedfromtheforfeitureoffinancialassurancepursuanttotheNewMexicoMiningActortheforfeitureoffinancialresponsibilitypursuanttotheWaterQualityActaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytorelieveminingcompaniesfromtheobligationtoestimate(andpotentiallyoverpay)theGRTcostincurredbyathird‐partycontractorthatwouldcompletethereclamationworkonbehalfofthestateintheeventthecompanyfailedtoconductthereclamationwork.



REFINERSANDPERSONSSUBJECTTONATURALGASPROCESSORSTAXEXEMPTIONFROMGRTANDCOMPENSATINGTAX

BriefDescription: Unlessthesaleorprocessingofproductsarefor(1)subsequentresaleintheordinarycourseofbusiness,(2)consumptionoutsidethestate,or(3)useasaningredientorcomponentpartofamanufacturedproduct,receiptsfromthesaleorprocessingofproductsthataresubjecttothenaturalgasprocessorstaxareexemptfromtheGRT.

Receiptsfromstoringorusingcrudeoil,naturalgas,orliquidhydrocarbonswhenstoredorusedinNewMexicobya"processor"orbyapersonengagedinthebusinessofrefiningoil,naturalgas,orliquidhydrocarbonswhostoresorusesthecrudeoil,naturalgas,orliquidhydrocarbonsintheregularcourseofhisrefiningbusinessareexemptfromGRTandcompensatingtax.


IntendedPurpose: Presumablytodefinethetaxbasewithrespecttothefirstpartoftheexemptionwhichonlyappliestothesaleorprocessingofproductstheprocessingofwhichissubjecttothenaturalgasprocessorstax.Thesecondpartoftheexemptionispresumablytoreducetaxpyramiding.


RELIGIOUSACTIVITIESEXEMPTIONFROMGRT

BriefDescription: Receiptsofaministerofa501(c)(3)religiousorganizationfromperformingreligiousservicestoanindividualrecipientoftheserviceareexemptfromGRT.


IntendedPurpose: Presumablytopreventtaxationofexpensesthatareeffectivelybusinessinputsofa501(c)(3)religiousorganization.



RESALEACTIVITIESOFANARMEDFORCESINSTRUMENTALITYEXEMPTIONFROMGRTANDCOMPENSATINGTAX

BriefDescription: ReceiptsfromsellingtangiblepersonalpropertyandtheuseofpropertybyanyinstrumentalityofthearmedforcesoftheUnitedStatesengagedinresaleactivitiesareexemptfromGRTandcompensatingtax.


IntendedPurpose: Presumablytocomplywiththepreemptiondoctrineandtoreducetaxpyramiding.


RETURNEDORDESTROYEDTOBACCOPRODUCTSREFUNDORCREDITAGAINSTTOBACCOPRODUCTSTAX

BriefDescription: Taxpayerswhohavepaidthetobaccoproductstaxontobaccoproductsthataredestroyedorreturnedtothesellerbythefirstpurchaserasspoiledorotherwiseunfitforsaleorconsumptionareentitledtoarefundoforcreditagainstthetobaccoproductstax.


IntendedPurpose: Presumablytodefinethetaxbaseandavoidrequiringataxpayertopaytaxesonunusabletobaccoproductsthathavenovalue.


SALEOFASERVICEFORRESALEGRTANDGGRTDEDUCTION

BriefDescription: Receiptsfromsellingaserviceforresalearedeductiblefromgrossreceiptsorgovernmentalgrossreceipts.


IntendedPurpose: Presumablytodefinethetaxbaseandavoidtaxpyramiding.

History: Originallyenactedin1969andamendedin1992,and2000.

The2000amendmentclarifiedthattheresalemustbesubjecttotheGRTorGGRTinordertoqualifyforthedeductionandremovedtherequirementthatthebuyerseparatelystatethevalueoftheservicepurchasedinhischargefortheserviceonitsubsequentsale.


SALEOFASERVICEFORRESALEDEDUCTIONFROMITGRT

BriefDescription: Receiptsfromprovidinganinterstatetelecommunicationsservicethatwillbeusedbyotherpersonsinprovidingtelephoneortelegraphservicestothefinaluseraredeductiblefrominterstatetelecommunicationsgrossreceipts.




SALEOFAEROSPACESERVICESFORTHEU.S.AIRFORCEGRTDEDUCTION

BriefDescription: ReceiptsfromperformingorsellingaerospaceresearchanddevelopmentforresaletoanorganizationforresaletotheU.S.,otherthananationallaboratory,aredeductiblefromgrossreceipts.


IntendedPurpose: ToincentivizetheU.S.AirForcetorelocatetheSpaceSystemsDivision)toNewMexico.



SALEOFGASOLINEATRETAILBYAREGISTEREDINDIANTRIBALDISTRIBUTOR


BriefDescription: GasolinereceivedinNewMexicoandsoldatretailbyaregisteredIndiantribaldistributorisdeductiblefromthegasolinetax,totheextentit’staxedbytheIndiannation,tribe,orpueblo,if:

(1) thesaleoccursonthedistributor’sIndianreservation,pueblogrant,ortrustland,

(2) thegasolineisplacedintothefuelsupplytankofamotorvehicleonthatreservation,pueblogrant,ortrustland,and

(3) theIndiannation,tribe,orpueblohascertifiedthatithasineffectanexcise,privilege,orsimilartaxonthegasoline

StatutoryBasis: 7‐13‐4(E)NMSA1978

IntendedPurpose: Presumablytopreventorreducetheeffectsofmulti‐jurisdictionaltaxation.

History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999and2007.



SALEOFGASOLINEBYAREGISTEREDINDIANTRIBALDISTRIBUTORFROMANON‐MOBILESTORAGECONTAINER


BriefDescription: GasolinethatisreceivedinNewMexicoandsoldbyaregisteredIndiantribaldistributorfromanon‐mobilestoragecontainerwithinthatdistributor’sIndianreservation,pueblogrant,ortrustlandforresaleoutsidetheIndianreservation,pueblogrant,ortrustlandisdeductiblefromthegasolinetaxaslongasthedistributorsoldatleast1milliongallonsofgasolinebetweenMayandAugust1998andthattheamountofgasolinedeductedbyaregisteredIndiantribaldistributordoesn’texceed2.5milliongallonspermonth.

StatutoryBasis: 7‐13‐4(F)NMSA1978

IntendedPurpose: Presumablytopreventandreducetheeffectsofmulti‐jurisdictionaltaxation.

History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.


SALEOFTANGIBLEPERSONALPROPERTYFORLEASINGGRTDEDUCTION

BriefDescription: Receiptsfromsellingtangiblepersonalpropertyandlicensestoabuyerwholeasesorsellsthetangiblepersonalpropertyorlicensearedeductiblefromgrossreceipts.

Thebuyermustpresentanontaxabletransactioncertificatetotheseller.





SALEOFTANGIBLEPERSONALPROPERTYFORRESALEGRTANDGGRTDEDUCTION

BriefDescription: Receiptsfromsellingtangiblepersonalpropertyorlicensestoabuyerwhoresellsthetangiblepersonalpropertyorlicensearedeductiblefromgrossreceiptsorfromgovernmentalgrossreceipts.





SALESTHROUGHWORLDWIDEWEBSITESGRTDEDUCTION

BriefDescription: ReceiptsderivedfromthesaleofaserviceorpropertymadethroughawebsitetoapersonwithabillingaddressoutsideNewMexicoaredeductiblefromgrossreceipts.


IntendedPurpose: PresumablybecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause.



SALESTOMANUFACTURERSGRTANDGGRTDEDUCTION

BriefDescription: Receiptsfromsellingtangiblepersonalpropertythatwillbeincorporatedasaningredientorcomponentparttoapersoninthemanufacturingbusinessaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.

Receiptsfromsellingtangiblepersonalpropertythatisconsumedinthemanufacturingprocesstoapersoninthemanufacturingbusinessaredeductiblefromgrossreceiptsandgovernmentalgrossreceiptsaccordingtothefollowingschedule:

20%ofreceiptsreceivedbeforeJanuary1,2014; 40%ofreceiptsreceivedincalendaryear2014; 60%ofreceiptsreceivedincalendaryear2015; 80%ofreceiptsreceivedincalendaryear2016; 100%ofreceiptsreceivedonorafterJanuary1,2017.



History: Originallyenactedin1969andamendedin1992,2012and2013.

The2012amendmentprovidedthephase‐indeductionforthesaleoftangiblepersonalpropertyconsumedinthemanufacturingprocess(SubsectionB).

The2013amendmentdefinedtheterm“consumable.”

SCHOOLBUSDEDUCTIONFROMSPECIALFUELEXCISETAX

BriefDescription: Specialfuel(number2diesel)usedinschoolbusesthatarecontractedwiththePublicEducationDepartmentisdeductiblefromcomputingthespecialfuelexcisetaxdue.

StatutoryBasis: 7‐16A‐10(F)NMSA1978

IntendedPurpose: PresumablytoreducethecoststogovernmentsincetheStateofNewMexicopurchasesthisfuel.

History: Originallyenactedin1992,1993,1997,1998,2001,2005,2006,2007,2009,and2013.


SCHOOLBUSEXEMPTIONFROMWDT

BriefDescription: UseofthehighwaysofNewMexicobyschoolbusesisexemptfromtheWDT.


IntendedPurpose: Presumablytoreducethecoststogovernment.


SERVICESONMANUFACTUREDPRODUCTSGRTDEDUCTION

BriefDescription: Receiptsfromsellingtheserviceofcombiningorprocessingcomponentsormaterialstoamanufactureraredeductiblefromgrossreceipts.Theservicemustbeperformeddirectlyuponthetangiblepersonalpropertythebuyerisinthebusinessofmanufacturingorupontheingredientorcomponentpartsthereof.



IntendedPurpose: Presumablytoreducetaxpyramidingastheservicemustbeperformeddirectlyupontangiblepersonalpropertyforamanufactureraspartofthereadyingofrawmaterialsorinthemanufacturingprocess.


SERVICESPERFORMEDOUTSIDETHESTATECREDITAGAINSTITGRT

BriefDescription: Ataxpayerwhohaspaidasales,use,grossreceipts,orsimilartaxtoanotherstateonthesameinterstatetelecommunicationsgrossreceiptsthataresubjecttoNewMexico’sITGRTisentitledtoacreditagainsttheITGRT.


IntendedPurpose: TocomplywithU.S.CommerceClauseconcernsandpreventactualmulti‐jurisdictionaltaxationoftheprivilegeofengaginginbusinessofprovidinginterstatetelecommunicationsservices.



STOCKBONUS,PENSION,ANDPROFIT‐SHARINGTRUSTSEXEMPTIONFROMPITANDCIT

BriefDescription: AtrustorganizedorcreatedintheU.S.andformingpartofastockbonus,pension,orprofit‐sharingplanofanemployerfortheexclusivebenefitofhisemployeesortheirbeneficiarieswhichisexemptfromtaxationundertheprovisionsoftheInternalRevenueCodeisexemptfromPITandCIT.

StatutoryBasis: 7‐2‐4(A)and7‐2A‐4(B)NMSA1978


History: ThePITexemptionwasoriginallyenactedin1965andamendedin1969,1971,and1981.

TheCITexemptionwasoriginallyenactedin1981andamendedin1986and1989.

TAXPAIDBYOUT‐OF‐STATETERMINALDEDUCTIONFROMGASOLINETAXANDSPECIALFUELEXCISETAX

BriefDescription: GasolineandspecialfuelreceivedinNewMexicoonwhichtheNewMexicogasolinetaxorspecialfuelexcisetaxwaspaidbytheout‐of‐stateterminalatwhichthegasolineorspecialfuelwasloadedaredeductiblefromcomputingthegasolinetaxorspecialfuelexcisetaxdue.

StatutoryBasis: 7‐13‐4(G)and7‐16A‐10(G)NMSA1978

IntendedPurpose: Presumablytoavoidtaxationundermultipletaxregimesasitisonlydeductibleifthegasolinetaxorspecialfuelexcisetaxwaspaidbytheout‐of‐stateterminalatwhichthegasolinewasloaded.

History: Thegasolinetaxsectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.

Thespecialfuelexcisetaxsectionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.

Thesubsectionscontainingthegasolinetaxandthespecialfuelexcisetaxdeductionsdiscussedherewerecreatedbyanamendmentin2007.


STADIUMSURCHARGEEXEMPTIONFROMGRTANDGGRT

BriefDescription: ReceiptsfromsalesataminorleaguebaseballstadiumonwhichastadiumsurchargeisimposedundertheMinorLeagueBaseballStadiumFundingActareexemptfromgrossreceiptstaxandgovernmentalgrossreceiptstax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms.

History: Originallyenactedin2001aspartofthelegislationthatenactedtheMinorLeagueBaseballStadiumFundingAct.

Evaluation: TheMinorLeagueBaseballStadiumFundingActprovidesanadditionalmethodofaccessingthecapitalmarketswiththeassistanceoftheNewMexicoFinanceAuthoritytomeettheneedforacompletefundingpackageforfunctionalandmodernminorleaguebaseballstadiums.BecausetheMinorLeagueBaseballStadiumFundingActallowsamunicipalitytoimposeastadiumsurchargeonproductsandservicessoldatorrelatedtothestadium,thisexemptionfromtheGRTpreventsthesefrombeingtaxedtwice.

IsotopesPark,homeoftheAlbuquerqueIsotopes,wasconstructedfrom2001to2003atareportedcostof$25million.TheLab,asithasbeennicknamed,openedinAprilof2003.

TAXPAIDINANOTHERSTATEFORPROPERTYANDSERVICESCREDITAGAINSTGRTANDCOMPENSATINGTAX

BriefDescription: Theamountofgrossreceipts,sales,compensating,orsimilartaxpaidtoanotherstateonpropertyacquiredinthatstateoranotherstateforuseinNewMexicooronservicesperformedoutsidethisstatemaybecreditedagainsttheamountofcompensatingtaxduetoNewMexicoontheuseofthepropertyortheGRTdueontheservicesperformedoutsideNewMexico.

StatutoryBasis: 7‐9‐79and7‐9‐79.1NMSA1978

IntendedPurpose: PresumablytoaddressU.S.CommerceClauseconcernsandpreventmulti‐jurisdictionaltaxationasagrossreceipts,sales,compensating,orsimilartaxmusthavebeenleviedonthepropertyorservicesinordertoqualifyforthecredit.

History: Thecompensatingtaxcreditforpropertywasoriginallyenactedin1966andamendedin1973and1991.

TheGRTcreditforserviceswasoriginallyenactedin1989andamendedin1994.


TAXPAIDONALCOHOLICBEVERAGESDESTROYEDINSHIPMENT,SPOILED,OROTHERWISEDAMAGED

REFUNDOFORCREDITAGAINSTLIQUOREXCISETAXANDLOCALLIQUOREXCISETAX

BriefDescription: Taxpayersareentitledtoarefundfortaxespaidpursuanttotheliquorexcisetaxandthelocalliquorexcisetaxonalcoholicbeveragesthatareunsaleableandnotconsumablebecausetheyaredestroyedinshipment,spoiled,ordamaged.


IntendedPurpose: Presumablytodefinethetaxbase,byavoidingtaxationofaproductthatisnotavailabletobesold.

History: Theliquorexcisetaxprovisionwasoriginallyenactedin1968andamendedin1969,1971,1973,1977,1984,and1995.

Thelocalliquorexcisetaxprovisionwasoriginallyenactedin1989.

TAXPAIDONGASOLINEORSPECIALFUELDESTROYEDBYFIRE,ACCIDENTORACTSOFGODBEFORERETAILSALE

REFUNDOFORCREDITAGAINSTGASOLINETAXANDSPECIALFUELEXCISETAX

BriefDescription: Ataxpayerisentitledtoarefundof,orcreditagainst,thegasolinetaxandspecialfuelexcisetaxpaidongasolineandspecialfuelthatisdestroyedbyfire,accident,oractsofGodwhileinthepossessionofthedistributor,wholesaler,orretailer.

StatutoryBasis: 7‐13‐11and7‐16A‐13NMSA1978

IntendedPurpose: Presumablytoensurethattaxesaren’tpaidongasolineandspecialfuelwhichthetaxpayerisunabletomarket.

History: Thegasolinetaxcreditandrefundsectionwasoriginallyenactedin1971andamendedin1983and1993.

Thespecialfuelexcisetaxcreditandrefundsectionwasoriginallyenactedin1992.


TAXPAIDONSPECIALFUELINCERTAINCIRCUMSTANCESREFUNDOFSPECIALFUELEXCISETAX

BriefDescription: Ataxpayerisentitledtoarefundofthespecialfuelexcisetaxpaidonspecialfuelused:

(1) inaschoolbus(authorizedbycontractwiththePublicEducationDepartment),

(2) topropelavehicleoff‐road,

(3) tooperateauxiliaryequipmentbyapowertake‐offfromthemainengineortransmissionofavehicle,or

(4) tooperateanon‐automotiveapparatusvehicle.

StatutoryBasis: 7‐16A‐13.1NMSA1978

IntendedPurpose: Presumably,inthecaseoftheschoolbusrefund,toreducethecoststogovernmentandtorecognizethattheotheractivitiesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthespecialfuelexcisetaxdistributionstotheStateRoadFund.


TAXPAIDTOANOTHERSTATECREDITAGAINSTMVX

BriefDescription: Avehiclethathasbeenacquiredthroughanout‐of‐statetransactionuponwhichagrossreceipts,sales,compensatingorsimilartaxwaspaidmaybecreditedagainsttheMVXduetoNewMexicoonthesamevehicle.


IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxation.



TAXPAIDTOANOTHERSTATEDEDUCTIONFROMGASOLINETAXANDSPECIALFUELEXCISETAX

BriefDescription: AtaxpayermaydeductgasolineandspecialfuelwhencomputingthegasolinetaxandspecialfuelexcisetaxifitisexportedfromNewMexicobyarackoperator,distributor,orwholesaleraslongas:

(1) thepersonexportingthegasolineandspecialfuelisregisteredinorlicensedbythedestinationstatetopaythatstate’sgasolineorequivalentfueltax,

(2) proofissubmittedthatthedestinationstate’sgasoline,specialfuel,orequivalentfueltaxhasbeenpaidorisnotdue,or

(3) thedestinationstate’sgasoline,specialfuel,orequivalentfueltaxinpaidtoNewMexicoinaccordancewiththetermsofanagreemententeredintowiththedestinationstate.

StatutoryBasis: 7‐13‐4(A)and7‐16A‐10(A)NMSA1978

IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationasthedeductionisonlyavailableifproofissubmittedthatthedestinationstate’sgasolinetaxwaspaidorisnotdue.

History: Thegasolinetaxdeductionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.

Thespecialfuelexcisetaxdeductionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.


TAXPAIDTOANOTHERSTATECREDITAGAINSTESTATETAX

BriefDescription: Acreditagainsttheestatetaxisavailablewhenanypropertyofaresidentissubjecttoanestatetaximposedbyanotherstatewhentheotherstate’staxdoesnothaveareciprocalprovision.Thecreditamountwouldbeforthelesserof:

(1) theamountoftheestatetaxpaidtheotherstateandcreditedagainstthefederalestatetax,or

(2) anamountcomputedbymultiplyingthefederalcreditthepercentageoftheestatethatthepropertyrepresents.


IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationasitisonlyavailabletotheextentthattaxeswerepaidtoanotherstate.


TAXPAIDTONAVAJONATIONFORSELLINGCOALSEVENTY‐FIVEPERCENTCREDITAGAINSTGRT

BriefDescription: AtaxpayerisentitledtoacreditagainsttheGRTfor75%oftheamountoftaxpaidtotheNavajoNationonthereceiptsfromthesellingofcoalseveredfromNavajoNationland.


IntendedPurpose: Presumablytoaddresstheincreasedtaxburdensassociatedwithmulti‐jurisdictionaltax.



TAXPAIDTONEWMEXICOTRIBESEXEMPTIONFROMITGRT

BriefDescription: Excludedfromthedefinitionof“interstatetelecommunicationsgrossreceipts”aregrossreceiptsorsalestaxesimposedbyIndiannations,tribes,orpueblosaslongastheIndiannation,tribe,orpueblotaxprovidesareciprocalexclusionforGRTimposedbyNewMexico.

StatutoryBasis: 7‐9C‐2(E)(2)NMSA1978

IntendedPurpose: Presumablytoavoidmulti‐jurisdictionaltaxation.


TAXPAIDTONEWMEXICOTRIBESSEVENTY‐FIVEPERCENTCREDITAGAINSTGRT

BriefDescription: AtaxpayerisentitledtoacreditagainsttheGRTfor75%oftheamountoftaxpaidtoanyofthe19NewMexicoPueblos,theJicarillaApacheNationortheMescaleroApacheTribeontaxabletransactionstakingplaceontriballands.


IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxation.

History: Originallyenactedin1999andamendedin2000,2001and2003.


TAXESPAIDTOOTHERSTATESCREDITAGAINSTPIT

BriefDescription: WhenaresidentindividualisliabletoanotherstatefortaxuponincomederivedfromsourcesoutsideNewMexicobutalsoincludedinnetincomeallocatedorapportionedtoNewMexico,theindividualisentitledtoacreditagainstthetaxduetoNewMexicointheamountofthetaxpaidtotheotherstate.


IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationandbecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause


The2013amendmentlimitedthetaxcreditpaidtotheamountoftaxliabilityinNewMexico.

TELECOMMUNICATIONPROVIDERSDEDUCTIONFROMITGRT

BriefDescription: Receiptsfrominterstatetelecommunicationsservicesthatareprovidedbyacorporationtoitselfortoanaffiliatedcorporationmaybedeductedfrominterstatetelecommunicationsgrossreceipts.





TRADE‐INALLOWANCEGRT,MVX,ANDDEDUCTIONS

BriefDescription: Receiptsfromatrade‐inoftangiblepersonalpropertyofthesametypebeingsoldaredeductiblefromgrossreceipts;allowancesgrantedforvehicletrade‐insaredeductiblefromthepricepaidorthereasonablevalueofthevehiclepurchasedincalculatingtheMVXandtheLVGRT.

StatutoryBasis: 7‐9‐71,7‐14‐4and7‐14A‐8NMSA1978

IntendedPurpose: Presumablytoproperlydefinethetaxbase.

History: TheGRTdeductionwasoriginallyenactedin1969andamendedin1979,and1991.

TheMVXdeductionwasoriginallyenactedin1988.

TheLVGRTdeductionwasoriginallyenactedin1991.

TRANSACTIONSININTERSTATECOMMERCEGRTANDGGRTDEDUCTION

BriefDescription: Receiptsfromtransactionsininterstatecommerceandfromsalesofradioortelevisionbroadcasttimeiftheultimatebuyerisanationalorregionaladvertiseraredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.





TRANSACTIONSININTRASTATETRANSPORTATIONANDSERVICESININTERSTATECOMMERCE

GRTDEDUCTION

BriefDescription: Receiptsincurredwhentransportingpersonsorpropertyonanintrastatebasisandunderasinglecontractfortransportationininterstateorforeigncommerce(includinghandling,storage,drayage,orpackingofpropertyorotheraccessorialservicesonproperty)aredeductiblefromgrossreceipts.

Receiptsfromtelephoneaccesschargespaidbyothertelephonecarriersaredeductible.


IntendedPurpose: PresumablytoaddressU.S.CommerceClauseconcernsandcomportwiththepreemptiondoctrinewithrespecttothetransportationdeductionasthetransportationmustbepartofaninterstatecommercetransactiontobeeligibleforthededuction.

Withregardtothetelephoneserviceportionofthededuction,theintendedpurposeispresumablytopreventdoubletaxation.



TRANSPORTATIONFROMWITHINTHEMUNICIPALITYTOOUTSIDETHEMUNICIPALITY

EXEMPTIONFROMLOCALOPTIONGRT

BriefDescription: Thetransportingofpersonsorpropertyforhirebyanymeansfromonepointwithinthemunicipality(orcounty)toanotherpointoutsidethemunicipality(orcounty)areexemptfromthesupplementalmunicipalGRT,themunicipallocaloptionGRT,thelocalhospitalGRT,thecountylocaloptionGRT,andthecountycorrectionalfacilityGRT.

StatutoryBasis: 7‐19‐14(A),7‐19D‐5(A),7‐20C‐5,7‐20E‐5,and7‐20F‐6NMSA1978

IntendedPurpose: Presumablytoresolveajurisdictionalquestionandprovidecertaintyaboutthetaxratethatappliesinthissituation.

History: ThesupplementalmunicipalGRTexemptionwasoriginallyenactedin1979andamendedin1983and1994.

ThemunicipalandcountylocaloptionGRTsexemptionswereoriginallyenactedin1993andamendedin1994.

ThecountycorrectionalfacilityGRTwasoriginallyenactedin1993.

ThelocalhospitalGRTexemptionwasoriginallyenactedin1991andamendedin1994.

UNCOLLECTIBLEDEBTSGRTANDGGRTDEDUCTION

BriefDescription: Refundsandallowancesmadetobuyersoramountswrittenoffthebooksasanuncollectibledebtbyapersonreportinggrossreceiptstaxandgovernmentalgrossreceiptsonanaccrualbasismaybedeductedfromgrossreceiptsandgovernmentalgrossreceipts.


IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonrefundedoruncollectiblereceipts.



UNPAIDCHARGESFORHOSPITALSERVICESCREDITAGAINSTGRT

BriefDescription: Alicensedmedicaldoctororlicensedosteopathicphysicianmayclaimacreditagainstgrossreceiptstaxesdueforthevalueofunpaidqualifiedhealthcareservices.Qualifiedhealthcareservicesmustbeprovidedbythedoctororphysicianwhileoncalltoahospital.


IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonnon‐existentreceipts.


USEOFTANGIBLEPERSONALPROPERTYFORLEASINGDEDUCTIONFROMCOMPENSATINGTAX

BriefDescription: Thevalueoftangiblepersonalpropertyheldforleasebyapersonengagedinthebusinessofsellingorleasingthesametypepropertymaybedeductedbeforecomputingcompensatingtaxdue;however,itdoesnotapplytothevalueoffurnitureorappliancesfurnishedaspartofarenthouseorapartment,coin‐operatedmachines,ormanufacturedhomes.




VEGETABLEOILORANIMALFATBIODIESELDEDUCTIONFROMSPECIALFUELEXCISETAX


BriefDescription: BiodieselthatisblendedorresoldatarackinNewMexicoisdeductiblefromthespecialfuelexcisetax

StatutoryBasis: 7‐16A‐10(H)(1)and(2)NMSA1978

IntendedPurpose: Presumablytopreventdoubletaxation.

History: Originallyenactedin2009andamendedin2013.The2013amendmentchangedadefinitionofthefuelasconsistingofatleast99%vegetableoiloranimalfatinfavorofjustusingtheterm‘biodiesel’.


VEHICLETHATISOWNEDBYTHESTATEOFNEWMEXICOEXEMPTIONFROMMVX

BriefDescription: AvehiclewithacertificateoftitleownedbyNewMexicooranypoliticalsubdivisionisexemptfromMVX.

StatutoryBasis: 7‐14‐6(C)NMSA1978


History: Originallyenactedin1988,andamendedin1990,1994,2004,and2007.

VEHICLETHATWASPREVIOUSLYREGISTEREDINNEWMEXICOEXEMPTIONFROMMVX

BriefDescription: ApersonapplyingforacertificateoftitleforavehicleregisteredinanotherstateisexemptfromthetaxifthepersonhaspreviouslyregisteredandtitledthevehicleinNewMexicoandhasownedthevehiclecontinuouslysincethattime.


IntendedPurpose: Presumablytopreventdoubletaxation(twiceinNewMexico).

History: Originallyenactedin1988,andamendedin1990,1994,2004,and2007.


VEHICLESEXEMPTIONSFROMGRTANDCOMPENSATINGTAX

BriefDescription: ThereceiptsfromsellingvehiclesonwhichataxisimposedbytheMotorVehicleExciseTaxAct,vehiclesregisteredbypersonswithsignificantmobilitylimitations,andvehiclesexemptfromtheMVXpursuanttoSection7‐14‐6(F)NMSA1978areexemptfromGRT.

TheuseofvehiclesusedinNewMexicoonwhichthetaximposedbytheMotorVehicleExciseTaxActhasbeenpaid,theuseofvehiclessubjecttoregistrationundertheMotorVehicleCodeandtheuseofvehiclesexemptfromMVXpursuanttoSection7‐14‐6(F)NMSA1978areexemptfromcompensatingtax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheexemptiononlyappliestovehiclesonwhichataxisimposedpursuanttotheMotorVehicleExciseTaxAct.

History: TheGRTexemptionwasoriginallyenactedin1969andamendedin1976,1981,1988,and2004.

Thecompensatingtaxexemptionwasoriginallyenactedin1969andamendedin1976,1983,1988,and2004.

VEHICLESUSEDFORSHORT‐TERMLEASINGCREDITAGAINSTMVX

BriefDescription: TheMVXissuspendedforvehiclesusedprimarilyasshort‐termrentalvehiclesthatarepartofavehiclefleetofatleastfivevehiclesthataresubjecttotheleasedvehiclegrossreceiptstax.


IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms.



VEHICLESUSEDININTERSTATECOMMERCEGRTDEDUCTION

BriefDescription: ReceiptsfromtherentalorleasingofvehiclesusedinthetransportationofpassengersorpropertyforhireininterstatecommerceundertheregulationsorauthorizationofanyagencyoftheU.S.aredeductiblefromGRT.




WAGESEXEMPTIONFROMGRT

BriefDescription: Receiptsofemployeesfromwages,salaries,commissionsorfromanyotherformofremunerationforpersonalservicesareexemptfromGRT.




WARRANTYOBLIGATIONSGRTDEDUCTION

BriefDescription: Receiptsofadealerfromfurnishinggoodsorservicestothepurchaseroftangiblepersonalpropertytofulfillawarrantyobligationofthemanufacturerofthepropertymaybedeductedfromgrossreceipts.


IntendedPurpose: Presumablytoproperlydefinethetaxbase,asthecostofthewarrantyispartofcostofthegoodorserviceandtaxeswerepaidonitatthetimeoftheoriginalpurchase.



ARGUABLE

WhilemanyofthedeviationsfromNewMexico’smanytaxprogramsareeasilycategorizedaseither“TaxExpenditures”or“NotTaxExpenditures”,thereareanumberaboutwhichgoodargumentscouldbemadeforboth.Withafewothers,thepurposeofthedeviationisnotentirelyclear;withoutknowingwhythedeviationwasputinthecode,itisnotpossibletodetermineinwhichcategoryitbelongs.

Aswiththe“NotTaxExpenditures”section,webelievethatincludinginformationaboutthesedeviations,evenwithoutanalysisofthefiscalimpact,makesthereaderbetterinformedabouttheNewMexicotaxstructure.


ADMINISTRATIVEANDACCOUNTINGSERVICESGRTDEDUCTION

BriefDescription: Receiptsofabusinessentityforadministrative,managerial,accounting,andcustomerservicesperformedbyitforanaffiliateuponanonprofitorcostbasisaredeductiblefromgrossreceipts.

Receiptsofabusinessentityfromanaffiliateforthejointuseorsharingofofficemachinesandfacilitiesuponanonprofitorcostbasisaredeductiblefromgrossreceipts.




AGRICULTURALPRODUCTSEXEMPTIONFROMGRTANDGGRT

BriefDescription: Receiptsfromsellinglivestock,includinghorses,andthereceiptsofgrowers,producersandtrappersfromsellinglivepoultry,unprocessedagriculturalproducts(forexample,abaleofhay,aheadoflettuceoranunroastedsackofgreenchili),hidesorpeltsareexemptfromtheGRTandGGRT.

ReceiptsfromsellingdairyproductsatretailarenotexemptfromtheGRT.




The2011amendmentexpandedthedeductionbydefining“livestock”asalldomesticordomesticatedanimalsthatareusedorraisedonafarmorranch,includingthecarcassesthereof,andincludeshorses,asses,mules,cattle,sheep,goats,swine,bison,poultry,ostriches,emus,rheas,camelidsandfarmedcervidaeuponanylandinNewMexico.

Evaluation: Thisdeductioncannotbecompletelyconsideredananti‐pyramidingdevice,asthereisnolimitationthatthereceiptscomefromthesaleofgoodsthatareintermediategoods,orthatareforresale.However,itisnotpossibletodeterminewhichportionisattributabletoresaleactivitiesandwhichisnot.


CERTAINCOMMISSIONSGRTDEDUCTION

BriefDescription: Receiptsderivedfromcommissionsfromsalesoftangiblepersonalpropertywhenthepropertysoldisnotsubjecttogrossreceiptstaxaredeductiblefromgrossreceipts.

Receiptsoftheownerofadealerstoreforsellingaprincipal’sgoodsaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoavoiddoubletaxationsincecommissionsaretaxableaspersonalincome.


CERTAINSALESFORRESALETENPERCENTCREDITAGAINSTGRTANDGGRT

BriefDescription: AtaxpayermayclaimacreditagainstGRTandGGRTforreceiptsfromsellingservicesforresaleaslongastheresaleisintheordinarycourseofbusiness,theresaleisnotsubjecttoeitherGRTorGGRT,andthebuyerdeliverstothesellerappropriatedocumentationfromTRDthattheresalemeetsthecriteriaforresaleintheordinarycourseofbusiness.


IntendedPurpose: Presumablytoremovethetaxburdenfromthe“sellersofservicesforresale”thatwillnotbetaxedatthefinalsale.



FEEDANDFERTILIZER&AUCTIONEERSSELLINGLIVESTOCKANDAGRICULTURALPRODUCTSATAUCTION

GRTDEDUCTION

BriefDescription: Receiptsfromsellingfeedforlivestock,fish,poultry,oranimalsraisedfortheirhides/peltsandfromsellingseeds,roots,bulbs,plants,soilconditioners,fertilizers,insecticides,germicides,insectsusedtocontrolpopulationsofotherinsects,fungicidesorweedicidesorwaterforirrigationpurposesaredeductiblefromgrossreceipts.



History: Originallyenactedin1969andamendedin1977,1983,1991,1992and2002.

GROSSAMOUNTSWAGEREDEXEMPTIONFROMGRT

BriefDescription: ExemptedfromGRTarereceiptsofahorseracetrackwhichareauthorizedbytheHorseRacingActtoberetainedbyahorseracetrackthatislicensedtoconducthorseraces.


IntendedPurpose: Presumablytoavoidtaxingreceiptsovergrossamountswageredwhichareundernoauthoritytobespentbyahorseracetrack.


Recommendation: Updatethestatutetoreflectthecorrectcitation.ItcurrentlyreferencesSection60‐1‐10NMSA1978whichwasrepealedin2007.PresumablytheintentionisforittoreferencethesuccessorstatutewhichappearstobeSection60‐1A‐19NMSA1978.


INSURANCECOMPANIESEXEMPTIONFROMGRT

BriefDescription: ThereceiptsofinsurancecompaniesoranyagentthereoffrompremiumsandanyconsiderationreceivedbyapropertybondsmanassecurityorsuretyforabailbondinconnectionwithajudicialproceedingareexemptfromGRT.


IntendedPurpose: Presumablytopreventtaxationundermultipletaxprograms,asthereceiptsofinsurancecompaniesaresubjecttotheinsurancepremiumtaxandpresumablytoensurethatconsiderationsreceivedassecurityofsuretyforabailbondarenottaxedastheyarenotrightlyconsideredreceipts.


LIVESTOCKFEEDINGEXEMPTIONFROMGRT

BriefDescription: Receiptsfromfeeding(includingpenningorhandlinglivestockpriortosaleandtraininglivestock)orpasturinglivestock,areexemptfromGRT.




PETROLEUMPRODUCTSSOLDTOTHEFEDERALGOVERNMENTEXEMPTIONFROMPETROLEUMPRODUCTSLOADINGFEE

BriefDescription: PetroleumproductssoldtotheU.S.oranyagencyorinstrumentalitythereoffortheexclusiveuseoftheU.S.oranyagencyorinstrumentalitythereofareexemptfromthePPLF.


IntendedPurpose: PresumablytoreducethecosttotheU.S.government.



PIPELINETRANSPORTATIONOFOILANDGASPRODUCTSEXEMPTIONFROMGRTANDCOMPENSATINGTAX

BriefDescription: Receiptsfromthesaleofoil,naturalgas,liquidhydrocarbon,oranycombinationthereofconsumedasfuelinthepipelinetransportationofsuchproductsareexemptfromGRT.

Theuseofoil,naturalgas,liquidhydrocarbonoranycombinationthereofasfuelinthepipelinetransportationofsuchproductsisexemptfromcompensatingtax.



History: TheGRTandcompensatingexemptionswereoriginallyenactedin1969.

PROCESSINGAGRICULTURALPRODUCTSGRTDEDUCTION

BriefDescription: Receiptsfromwarehousinggrainorotheragriculturalproductsandfromthreshing,harvesting,growing,cultivating,andprocessingagriculturalproductsaredeductiblefromgrossreceipts.



History: Originallyenactedin1969,andamendedin1970,and2000.

RECEIPTSOFHOMEOWNERSASSOCIATIONSEXEMPTIONFROMGRT

BriefDescription: Receiptsofhomeowners’associations(HOA)frommembershipfees,dues,andassessmentsfromowner‐memberstobeusedfortax,insurance,utilityexpenses,managementandimprovement,maintenanceorrehabilitationofthosecommonareas,elements,orfacilitiesappurtenanttheretoforcommonly‐ownedareasandfacilitiesareexemptfromGRT.


IntendedPurpose: PresumablytoprovideclarificationthataHOAcanberecognizedasa501(c)(4)organizationtoqualifyforthisexemptionifitsactivitiesbenefitacommunity.



RESALEOFCERTAINMANUFACTUREDHOMESGRTDEDUCTION

BriefDescription: ReceiptsfromtheresaleofamanufacturedhomewhichwassubjecttoGRT,compensatingtax,orMVXuponitsoriginalsaleoruseinNewMexicoaredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoavoidtaxationundermultipleprograms,asthedeductiononlyappliesiftheinitialsalewassubjecttotheGRT,thecompensatingtax,ortheMVX.


SALEBYORTOU.S.ARMEDFORCESEXEMPTIONFROMLIQUOREXCISETAXANDLOCALLIQUOR

EXCISETAX

BriefDescription: AlcoholicbeveragessoldtoorbyanyinstrumentalityoftheU.S.armedforcesthatareengagedinresaleactivitiesareexemptfromtheliquorexcisetaxandthelocalliquorexcisetax.


IntendedPurpose: PresumablytocomplywiththepreemptiondoctrinewithrespecttosalesbyU.S.instrumentalities.

History: Theliquorexcisetaxexemptionwasoriginallyenactedin1966andamendedin1973,1984,and1985.

Thelocalliquorexcisetaxexemptionwasoriginallyenactedin1989.


SALEOFPROSTHETICDEVICESGRTANDGGRTDEDUCTION

BriefDescription: Receiptsfromsellingprostheticdevicestopersonslicensedtopracticeinanumberofmedicaldisciplinesaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.

Thebuyermustdeliveranontaxabletransactioncertificateandmustdelivertheprostheticdeviceincidentaltotheperformanceofaserviceandmustincludethevalueoftheprostheticdeviceinhischargefortheservice.


IntendedPurpose: Presumablytoreducetaxpyramidingasthevalueoftheprostheticmustbefullyincludedinthefinalpriceoftheservice,andthenatureofthefinalsalewilldeterminewhetheritistaxableornot.


SALEORLEASEOFREALPROPERTY&LEASEOFMANUFACTUREDHOMESGRTDEDUCTION

BriefDescription: Receiptsfromthesaleorleaseofrealproperty,whichincludesthelandandanypermanentfixtures,fromtheleaseofamanufacturedhomeforatleastonemonth,andfromtherentalofspaceforamanufacturedhomeorrecreationalvehicleforatleastonemonth,aredeductiblefromgrossreceipts.


IntendedPurpose: Presumablytoreducetaxburdensassociatedwithoccupancyofresidentialandcommercialspacesonanon‐transientbasis.



SALESTOFEDERALGOVERNMENT,STATEOFNEWMEXICO,ORNEWMEXICOTRIBESEXEMPTIONFROMCIGARETTETAXAND

TOBACCOPRODUCTSTAX

BriefDescription: SalesofcigarettesandtobaccoproductstotheU.S.,theStateofNewMexico,oranIndiannation,tribe,orpuebloareexemptfromthecigarettetaxandthetobaccoproductstax.

StatutoryBasis: 7‐12‐4and7‐12A‐4NMSA1978


History: Thecigarettetaxexemptionwasoriginallyenactedin1943.Section7‐12‐4NMSA1978wasamendedin1971,1992,and2010.The2010legislationalsoincludedanincreaseofthecigarettetaxby$0.75perpack.

Thetobaccoproductstaxwasoriginallyenactedin1986.Section7‐12A‐4NMSA1978amendedin2009toexpandtheexemptiontoincludethesaleoftobaccototribesortribalmembers.

SALESTOGOVERNMENTALAGENCIESGRTANDGGRTDEDUCTION

BriefDescription: ReceiptsfromsellingtangiblepersonalpropertytotheU.S.,theStateofNewMexico,oranIndiannation,tribe,orpuebloforuseonanIndianreservationorpueblograntaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.



History: Originallyenactedin1969andamendedin1976,1985,1989,1992,1993,1995,2000,2001,and2003.


TAXPAIDONSPECIALFUELUSEDCREDITAGAINSTSPECIALFUELEXCISETAX

BriefDescription: Ataxpayerisentitledtoacreditagainstthecalculatedspecialfuelexcisetaxdueforareportingperiodforspecialfuelexcisetaxpaidonspecialfuelusedduringthereportingperiod.


IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonfuelthatisnotavailabletobesold.


TRAVELAGENTS’COMMISSIONSGRTDEDUCTION

BriefDescription: Receiptsoftravelagentsfromcommissionspaidbymaritimetransportationcompanies,andinterstateairlines,railroadsandpassengerbusesforbooking,referral,reservation,orticketservicesaredeductiblefromgrossreceipts.




USEOFELECTRICITYEXEMPTIONFROMCOMPENSATINGTAX

BriefDescription: Electricityusedintheproductionandtransmissionofelectricity,includingtransmissionusingvoltagesourceconversiontechnologyisexemptfromthecompensatingtax.


IntendedPurpose: Presumablytoreducetaxpyramiding


The2012amendmentexpandedtheexemptiontoincludeelectricityusedinthetransmissionofelectricityusingvoltagesourceconversiontechnology.


VETERINARYMEDICALFORTREATMENTOFCATTLEGRTDEDUCTION

BriefDescription: Receiptsfromsalesofveterinarymedicalservices,medicineormedicalsuppliesusedinthemedicaltreatmentofcattlemaybedeductedfromgrossreceiptsifthesaleismadeto:

(1) apersonwhostatesinwritingthatthepersonisregularlyengagedinthebusinessofranchingorfarming,includingdairyfarming,inNewMexico,or

(2) aveterinarianwhoisprovidingveterinarymedicalservices,medicine,ormedicalsuppliesinthetreatmentofcattleownedbythatperson.




WIDE‐AREATELEPHONEANDPRIVATECOMMUNICATIONSSERVICE

DEDUCTIONFROMITGRT

BriefDescription: Receiptsfromtheprovisionofwide‐areatelephoneserviceandprivatecommunicationsserviceinthisstatemaybedeductedfrominterstatetelecommunicationsgrossreceipts.


IntendedPurpose: Unclear.



APPENDIXA:EXECUTIVEORDER2011‐071



APPENDIXB:TABLEOFEXPENDITURESBYCATEGORY

CitizenBenefitExpendituresNameofExpenditure StatuteAffordableHousingCreditagainstModifiedCombinedTax,PIT,orCIT 7‐9I‐5ArmedForcesSalariesExemptionfromPIT 7‐2‐5.11Back‐to‐SchoolTax‐FreeWeekendDeductionfromGRT 7‐9‐95BusesOperatedbyReligiousandNonprofitCharitableOrganizations ExemptionfromWDT 7‐15A‐5(C)CapitalGainDeductionfromPIT 7‐2‐34CertainDisabledMilitaryVeteranExemptionfromMVX 7‐14‐6(E)ChildCaretoPreventIndigencyCreditagainstPIT 7‐2‐18.1ContributionsofInventorytoNonprofitOrganizationsorGovernmentalAgenciesDeductionfromCompensatingTax 7‐9‐91Corporate‐SupportedChildCareCreditagainstCIT 7‐2A‐14DisabledPersonExemptionfromMVX 7‐14‐6(D)DisabledStreetVendorsExemptionfromGRT 7‐9‐41.3EducationTrustFundPaymentDeductionfromPIT 7‐2‐32

ElectronicIDReaderCreditagainstPITandCIT7‐2‐18.8and7‐2A‐18

ExcessofElderlyTaxpayersMaximumPropertyTaxLiabilityRebatefromPIT 7‐2‐18FeesfromSocialOrganizationsExemptionfromGRT 7‐9‐39HybridVehicleExemptionfromMVX 7‐14‐6(G)

JobMentorshipCreditagainstPITandCIT7‐2‐18.11and7‐2A‐17.1

Loan‐RelatedCostsGRTDeduction 7‐9‐61.1Low‐andMiddle‐IncomeTaxpayersExemptionfromPIT 7‐2‐5.8

Low‐IncomeComprehensiveTaxRebateandPropertyTaxRebateagainstPIT7‐2‐14(A)and7‐2‐14.3

MedicalCareSavingsAccountExemptionfromPIT 7‐2‐5.6NewMexicoNationalGuardMemberPremiumsPaidforGroupLifeInsuranceExemptionfromPIT 7‐2‐5.10NonathleticSpecialEventatNewMexicoStateUniversityGRTDeduction 7‐9‐104NonprofitElderlyCareFacilityExemptionfromGRT 7‐9‐16NonprofitOrganizationsExemptionfromGRT 7‐9‐29NonprofitOrganizationsFundraisersGRTDeduction 7‐9‐85OfficiatingatNewMexicoActivitiesAssociationEventsExemptionfromGRT 7‐9‐41.4OrganDonationDeductionfromPIT 7‐2‐36PersonsOneHundredandOlderExemptionfromPIT 7‐2‐5.7PersonsSixty‐FiveandOlderorBlindExemptionfromPITand a ComprehensiveTaxRebate

7‐2‐5.2and7‐2‐14(C)

PreservationofCulturalPropertyCreditagainstPITandCIT 7‐2‐18.2and7‐2A‐8.6

SaleofFoodatRetailFoodStoresGRTDeductionandHoldHarmlessDistribution7‐9‐92and7‐1‐6.46,7‐1‐6.47

SaleofTextbooksinCertainBookstoresExemptionfromGRT 7‐9‐13.4SalestoNonprofitOrganizationsGRT,GGRT,andCompensatingTax Deduction 7‐9‐60,7‐9‐


15SpecialNeedsAdoptedChildCreditagainstPIT 7‐2‐18.16UnreimbursedorUncompensatedMedicalCareExpensesCreditFromPIT 7‐2‐18.13UnreimbursedorUncompensatedMedicalCareExpensesDeductionFromPIT 7‐2‐37UnreimbursedorUncompensatedMedicalCareExpensesExemptionFromPIT 7‐2‐5.9VehiclesTitledbeforeJuly1,1991ExemptionfromLVGRT 7‐14A‐9

VeteranEmploymentCreditagainstPITandCIT 7‐2‐18.28and7‐2A‐27

Welfare‐to‐WorkCreditagainstPITandCIT7‐2‐18.5and7‐2A‐8.8

WorkingFamiliesCreditagainstPIT 7‐2‐18.15

EconomicDevelopmentExpendituresNameofExpenditure StatuteAircraftSalesorServicesGRTDeduction 7‐9‐62.1AlternativeEnergyProductManufacturersCreditagainstModifiedCombinedTax 7‐9J‐1etseq.AngelInvestmentCreditagainstPIT 7‐2‐18.17ApportionmentElectionofCITForManufacturers 7‐4‐10(B)ApportionmentElectionofCITForHeadquarters 7‐4‐10(C)

BusinessFacilityRehabilitationCreditagainstPITandCIT7‐2‐18.4and7‐2A‐15

CommercialMotorCarrierVehiclesOperatingExclusivelywithin10MilesofMexicoBorderExemptionfromTripTaxandWDT

7‐15‐3.2and7‐15A‐5(D)

FilmandTelevisionCreditagainstPITandCIT 7‐2F‐1etseq.High‐WageJobsCreditagainstModifiedCombinedTax 7‐9G‐1HostingWorldWideWebSitesGRTDeduction 7‐9‐56.2InvestmentCreditagainstGRT,CompensatingTax,orWithholdingTax 7‐9A‐1etseq.InvestmentManagementorAdvisoryServicesGRTDeduction 7‐9‐108

JetFuelFifty‐FivePercentGRTandCompensatingTaxDeduction7‐9‐83and7‐9‐84

LaboratoryPartnershipwithSmallBusinessCreditagainstGRT 7‐9E‐1etseq.ResearchandDevelopmentSmallBusinessCreditagainstGRTorFiftyPercentCreditagainstWithholdingTax 7‐9H‐1etseq.RuralJobCreditagainstModifiedCombinedTax,PIT,andCIT 7‐2E‐1.1SaleofCertainServicestoanOut‐of‐StateBuyerGRTDeduction 7‐9‐57SalestoQualifiedFilmProductionCompanyGRTandGGRTDeduction 7‐9‐86SalestoState‐CharteredCreditUnionsGRTandGGRTDeduction 7‐9‐61.2TechnologyJobsandResearchandDevelopmentCreditagainstGRT,CompensatingTax,WithholdingTax,PIT,orCIT 7‐9F‐1etseq.TIDD–TaxIncrementforDevelopmentDistrictDedicatedIncrements 5‐15‐15VentureCapitalInvestmentCreditagainstPIT 7‐2D‐8.1


Environment,Conservation&RenewableEnergyExpendituresNameinTER Statute

AdvancedEnergyCreditagainstGRT,CompensatingTax,WithholdingTax,PIT,orCIT

7‐2‐18.25,7‐2A‐25,and7‐9G‐2

AdvancedEnergyGRTandCompensatingTaxDeduction 7‐9‐114

AgriculturalBiomassCreditagainstPITandCIT7‐2‐18.26and7‐2A‐26

AgriculturalWaterConservationExpensesCreditagainstPITandCIT7‐2‐18.20and7‐2A‐22

BiodieselBlendingFacilityTaxThirtyPercentCreditagainstGRTandCompensatingTax 7‐9‐79.2Biomass‐RelatedEquipmentandBiomassMaterialsDeductionfromCompensatingTax 7‐9‐98

BlendedBiodieselFuelCreditagainstPITandCIT7‐2‐18.21,7‐2A‐23

ConveyanceofLandforConservationorPreservationFiftyPercentCreditagainstPITandCIT

7‐2‐18.10and7‐2A‐8.9

GeothermalGround‐CoupledHeatPumpCreditagainstPITandCIT7‐2‐18.24and7‐2A‐24

RenewableEnergyProductionCreditagainstPITandCIT 7‐2‐18.18and7‐2A‐19

SolarEnergySystemsGRTDeduction 7‐9‐112SolarMarketDevelopmentCreditagainstPIT 7‐2‐18.14

SustainableBuildingCreditagainstPITandCIT7‐2‐18.19and7‐2A‐21

WindandSolarGenerationEquipmentGRTDeduction 7‐9‐54.3

HealthCareIncentiveNameinTER StatuteConstructionEquipmentandMaterialsUsedintheConstructionofSoleCommunityProviderHospitalsGRTDeduction 7‐9‐100ConstructionofSoleCommunityProviderHospitals GRTDeduction 7‐9‐99DOH‐LicensedHospitalsCreditagainstGRT 7‐9‐96.1DOH‐LicensedHospitalsFiftyPercent GRTDeduction 7‐9‐73.1

HealthCarePractitionerServicesGRTDeductionandHoldHarmlessDistribution7‐9‐93,7‐1‐6.46,and7‐1‐6.47

HearingandVisionAidsGRTDeduction 7‐9‐111PenaltyPursuanttoSection7‐1‐71.2NMSA1978CreditAgainstGRT,CompensatingTaxandWithholdingTax 7‐9‐105PhysicianParticipatinginCancerTreatmentClinicalTrialsCreditagainstPIT 7‐2‐18.27PrescriptionDrugsandOxygenGRTandGGRTDeduction 7‐9‐73.2RuralHealthCarePractitionerCreditagainstPIT 7‐2‐18.22TaxStampsRateDifferentialinCigaretteTax 7‐12‐7(D)


HighlySpecializedIndustryExpendituresNameinTER StatuteBorder‐ZoneTrade‐SupportCompanyGRTDeduction 7‐9‐56.3BusesUsedforTransportationofAgriculturalLaborersExemptionfromWDT 7‐15A‐5(B)CoalExemptionfromSeveranceSurtax 7‐26‐6.2ElectricTransmissionandStorageFacilitiesGRTandCompensatingTaxDeduction

7‐9‐101and7‐9‐102

ElectricTransmissionandStorageFacilitiesServicesGRTDeduction 7‐9‐103ElectricityConversionGRTDeduction 7‐9‐103.1ElectricityExchangeGRTDeduction 7‐9‐103.2FuelforSpaceVehiclesExemptionfrom GRTandCompensatingTax 7‐9‐26.1GoodsandServicesfortheDODRelatedtoDirectedEnergyandSatellitesGRTDeduction 7‐9‐115

LocomotiveEngineFuelGRTandCompensatingTaxDeduction7‐9‐110.1and7‐9‐110.2

LotteryRetailerReceiptsGRTDeduction 7‐9‐87MedicalandHealthCareServicesGRTDeduction 7‐9‐77.1

MicrobrewerBeerandSmallWineriesRateDifferentialfromLiquorExciseTax7‐17‐5(A)(5)and7‐17‐5(A)(6)

MilitaryConstructionServicesGRTDeduction 7‐9‐106MilitaryTransformationalAcquisitionProgramsGRTDeduction 7‐9‐94NaturalGasExemptionfromOilandGasSeveranceTax 7‐29‐4(B)(1)

NaturalGasRateDifferentialfromOilandGasEmergencySchoolTax7‐31‐4(A)(6)and7‐31‐4(A)(7)

NaturalGasRateDifferentialfromOilandGasSeveranceTax

7‐29‐4(A)(4),7‐29‐4(A)(6),and7‐29‐4(A)(7)

NewspaperSalesGRTDeduction 7‐9‐64OilandOtherLiquidHydrocarbonsExemptionfromOilandGasSeveranceTax 7‐29‐4(B)(2)

OilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasEmergencySchoolTax

7‐31‐4(A)(4)and7‐31‐4(A)(5)

OilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasSeveranceTaxRate

7‐29‐4(A)(3),7‐29‐4(A)(5),7‐29‐4(A)(8),and7‐29‐4(A)(9)

ProductionorStagingofProfessionalContestsGRTDeduction 7‐9‐107PublicationSalesGRTDeduction 7‐9‐63PursesandJockeyRemunerationatNewMexicoRacetracksExemptionfromGRT 7‐9‐40(A)RailroadEquipment,Aircraft,andSpaceVehiclesExemptionfromCompensatingTax 7‐9‐30RealEstateTransactionsGRTDeduction 7‐9‐66.1SaleandUseofAgriculturalImplements,FarmTractors,Aircraft,andMotorVehiclesthatDon’tHavetobeRegisteredGRTandCompensatingTaxDeduction

7‐9‐62 and7‐9‐77

SaleofSoftwareDevelopmentServicesGRTDeduction 7‐9‐57.2


Spaceport‐RelatedActivitiesGRTDeduction 7‐9‐54.2Space‐RelatedTestArticlesDeductionfromCompensatingTax 7‐9‐54.4TestArticleDeductionfromCompensatingTax 7‐9‐54.5UraniumEnrichmentPlantEquipmentDeductionfromCompensatingTax 7‐9‐78.1UraniumHexafluorideandUraniumEnrichmentGRTDeduction 7‐9‐90


APPENDIXC:FREQUENTLYUSEDACRONYMS

ACA–AffordableCareAct

CIT‐CorporateIncomeTax

CRS‐CombinedReportingSystem(CRSreturnsincludeGRT,compensatingtax,andwithholdingtax)

DOH–NewMexicoDepartmentofHealth

EDD–NewMexicoEconomicDevelopmentDepartment

EMNRD–NewMexicoEnergy,Minerals,andNaturalResourcesDepartment

GGRT‐GovernmentalGrossReceiptsTax

GRT‐GrossReceiptsTax

HSD–NewMexicoHumanServicesDepartment

ITGRT‐InterstateTelecommunicationsGRT

LVGRT‐LeasedVehicleGRT

MCF‐1,000CubicFeet

MFA‐NewMexicoMortgageFinanceAuthority

MVX‐MotorVehicleExciseTax

NAICS–NorthAmericanIndustryClassificationSystem

NMDOT–NewMexicoDepartmentofTransportation

NMENV–NewMexicoEnvironmentDepartment

ONGARD–OilandNaturalGasAdministrationandRevenueDatabase

PIT‐PersonalIncomeTax

PPLF–PetroleumProductsLoadingFee

REPTC–RenewableEnergyProductionTaxCredit

RSTP–RevenueStabilizationandTaxPolicy‐aninterimlegislativecommittee

TIDD‐TaxIncrementDevelopmentDistrict

TPP‐TangiblePersonalProperty

TRD‐NewMexicoTaxationandRevenueDepartment

WDT‐WeightDistanceTax

WTI‐WestTexasIntermediate


APPENDIXD:PRINCIPLESOFGOODTAXPOLICY

Therehasbeenmuchdiscussioninrecentyearsaboutwhatmakesgoodtaxpolicy,andthereareanumberofprincipleswhichestablishconsensus.Weprovideabriefoverviewofeachbelow.Itmustbenoted,however,thattheseprinciplesareofteninconflict,anditistheresponsibilityoftheLegislatureandexecutivetoworktogethertomaintainbalancebetweentheseprinciples.

PerhapsthemostglaringexampleofhowsomeprinciplescanoverwhelmothersisNewMexico’sGrossReceiptsandCompensatingTaxAct.IthasbecomeincreasinglycomplexaseffortshavebeenmadetoachieveEquity,Efficiency,and—withrecentreportingrequirements—Accountability.Putanotherway,Simplicityhasbeensacrificedonthealtarofothertaxpolicyprinciples.

Weusethisillustrationnottodisparageanyparticularsectionofthetaxcodebuttoremindpolicymakersthatrelianceontheseprinciplesrequiresconsiderationsofhowapplicationofoneprincipleimpactsotherprinciples.

ADEQUACYTaxrevenuesshouldbeadequatetosupportneededgovernmentservices.Inherentinthisprincipleisthefactthattaxesarenecessaryinordertoprovidetheseservices.Unfortunately,thereisnoobjectivemeasureastowhatconstitutes“adequate”asthisconceptistiedtightlytothedeterminationaboutwhatservicesgovernmentshouldprovideandatwhatlevelofservicetheseshouldbeprovided.Adequacyisoftencitedasthereasonforincreasingtaxeswithoutacorrespondingconversationabouttheappropriatenessoftheservicesbeingprovidedortheappropriatenessofthelevelofthatservice.Thetwoconversationsshouldtakeplacetogether.

EQUITYTaxequityorfairnessisconcernedwithhowtaxburdensaredistributedamongtaxpayers.Therearetwodifferenttypesofequity:1)“vertical”equitywhichsaysthattaxburdensshouldbedistributedaccordingtotaxpayers’abilitytopay,sothattaxpayerswithgreaterabilitytopaybearalargerburdenthanthosewithalesserabilitytopay,and2)“horizontal”equitywhichisinterestedinensuringthatsimilarly‐situatedtaxpayersfacesimilartaxburdens.Withouthorizontalequity,thegovernmentisputtingitsthumbonthescalebygivingonetaxpayeracompetitiveadvantageoveranother.Theremaybelegitimatepolicyreasonsfordoingso,butitshouldneitherbedonelightlynorwithoutanunderstandingaboutwhatishappening.

EFFICIENCYInthiscontext,efficiencyisthetermeconomistsapplytopoliciesthatbenefiteconomicgrowth.Taxpoliciesaffecttheefficiencyoftheeconomyincomplicatedways.Asageneralrule,taxefficiencyrequiresthattaxesbeleviedinsuchawayastominimizemarketdistortionsthatoccurastaxpayerssubstituteuntaxedgoodsfortaxedgoodssoastoreducetaxburdens.Asanexample,incometaxesonlaborincomemayinducetaxpayerstoworklessandinsteadusetheirtimefornon‐taxedleisure.Theresultisalowerlaborsupplyandlesseconomicgrowth.

Evaluationofefficiencyintheapplicationofeconomictheoryiscomplicatedwhenanactivitygeneratesexternalcosts,suchasenvironmentaldegradation.Thesecostsare“external”inthesensethattheymaynotbefullyconsideredbyindividualactorsintheirmarketplacedecisions.Inthiscase,taxesmaybeimposedasproxiesforcoststhatwouldotherwisenotbetakenintoaccount


andcanarguablyimprovethefunctioningoftheeconomy.Forexample,thisreasoningsupportstaxexpendituresforrenewableenergybecausetheymayhavetheeffectofreducingpollution,animportantexampleofanexternalcost.

SIMPLICITYTaxpayersincurcompliancecostsastheyprepare,submit,andkeeprecordsabouttaxreturns.Theyalsofacesignificantpenaltiesforfailuretocorrectlypreparethosereturns.NewMexico’sstateandlocalgovernmentsincuradministrativecostsastheycollecttaxes,checkontheaccuracyoftaxreturnsandtaxpayments,anddealwithtaxpayerswhounderpayorfailtopay.Thesecostsareinescapable,buttheirmagnitudeisaffectedbyhowtaxesaredefinedandcollected:themorecomplicatedthecode,thehigherthecostthattheStatemustbeartoensurecompliance.

Whiletheymayincreaseaccountability,taxexpendituresthatrequireadditionalreportingmoveawayfromthetaxprincipleofsimplicity‐forboththetaxpayerandtheadministrationofthetaxcode.Althoughgenerallyhiddenfromview,thecostsofcollectionandcomplianceimposesignificantburdensonsocietyandshouldbekepttoaminimumlevel,consistentwithothergoals.

ACCOUNTABILITYGoodtaxpolicysuggeststhattaxpreferencesshouldbeeasytomonitorandevaluate.Moreovertaxesshouldbetransparentsothattaxpayerscanbetterevaluategovernmentpolicy.Improvedaccountabilityisanimportantgoalofthistaxexpenditurereport.


INDEXOFSTATUTES

Pleasenotethatstatutesarenotlistedinnumericalorderbytaxprogram.Thesoftwareordersthestatutesnumericallybutdoesnotrecognizethehyphenatedsections.Inshort,itlists,forexample,7‐12‐1etseq.before7‐9‐1.

5‐15‐15.....................................................................1797‐12‐4........................................................................2477‐12‐7(D).................................................................1757‐12A‐4.....................................................................2477‐12A‐5.....................................................................2087‐12A‐6.....................................................................2177‐13‐11.....................................................................2267‐13‐17.....................................................................2157‐13‐4(A).................................................................2287‐13‐4(D).................................................................1997‐13‐4(E)..................................................................2197‐13‐4(F)..................................................................2207‐13‐4(G).................................................................2247‐13‐4.4....................................................................1967‐13A‐4(A)..............................................................2137‐13A‐4(B)..............................................................2437‐13A‐5(A)..............................................................2027‐13A‐5(B)..............................................................1947‐14‐4........................................................................2327‐14‐6(A).................................................................1937‐14‐6(B).................................................................2367‐14‐6(C)..................................................................2367‐14‐6(D)...................................................................697‐14‐6(E)....................................................................567‐14‐6(F)..................................................................1927‐14‐6(G)...................................................................977‐14‐7........................................................................2277‐14‐7.1....................................................................2377‐14A‐7.....................................................................2087‐14A‐8.....................................................................2327‐14A‐9.....................................................................1857‐15‐3.2......................................................................607‐15A‐5(A)..............................................................2237‐15A‐5(B)................................................................527‐15A‐5(C).................................................................517‐15A‐5(D)................................................................607‐15A‐6(B)..............................................................2137‐1‐6.46............................................................90,1597‐1‐6.47....................................................................1597‐16A‐10(A)............................................................2287‐16A‐10(E)............................................................1997‐16A‐10(F)............................................................2227‐16A‐10(G)............................................................224

7‐16A‐10(H)(1)....................................................2357‐16A‐10(H)(2)....................................................2357‐16A‐12..................................................................2487‐16A‐13..................................................................2267‐16A‐13.1..............................................................2277‐17‐11.....................................................................2267‐17‐5A(5)..............................................................1147‐17‐5A(6)..............................................................1147‐17‐6........................................................................2077‐17‐9........................................................................2457‐19‐14(A)..............................................................2347‐19‐14(B)..............................................................1957‐19D‐5(A)..............................................................2347‐19D‐5(B)..............................................................1957‐20C‐5.....................................................................2347‐20E‐5.....................................................................2347‐20F‐6.....................................................................2347‐2‐13........................................................................2317‐2‐14(A).................................................................1097‐2‐14(C).................................................................1377‐2‐14.3....................................................................1097‐2‐18...........................................................................827‐2‐18.1...............................................................57,587‐2‐18.10....................................................................667‐2‐18.11.................................................................1027‐2‐18.13.................................................................1827‐2‐18.14.................................................................1687‐2‐18.15.................................................................1907‐2‐18.16.................................................................1727‐2‐18.17....................................................................387‐2‐18.18.................................................................1477‐2‐18.19.................................................................1737‐2‐18.2....................................................................1417‐2‐18.20....................................................................337‐2‐18.21....................................................................487‐2‐18.22.................................................................1517‐2‐18.24....................................................................887‐2‐18.25....................................................................257‐2‐18.26....................................................................317‐2‐18.27.................................................................1397‐2‐18.28.................................................................1877‐2‐18.4.......................................................................537‐2‐18.5....................................................................188


7‐2‐18.8......................................................................817‐2‐2(N)....................................................................2117‐2‐32..........................................................................757‐2‐34..........................................................................547‐2‐36........................................................................1347‐2‐37........................................................................1837‐2‐4(A)....................................................................2247‐2‐4(B)....................................................................1967‐24‐12.....................................................................2457‐24‐13.....................................................................2157‐24‐14.....................................................................2267‐2‐5.10....................................................................1237‐2‐5.11......................................................................437‐2‐5.2.......................................................................1377‐2‐5.5.......................................................................2037‐2‐5.6.......................................................................1137‐2‐5.7.......................................................................1367‐2‐5.8.......................................................................1087‐2‐5.9.......................................................................1847‐25‐7........................................................................2147‐29‐4(A)(3)...........................................................1337‐29‐4(A)(4)...........................................................1207‐29‐4(A)(5)...........................................................1337‐29‐4(A)(6)...........................................................1207‐29‐4(A)(7)...........................................................1207‐29‐4(A)(8)...........................................................1337‐29‐4(A)(9)...........................................................1337‐29‐4(B)(1)...........................................................1187‐29‐4(B)(2)...........................................................1317‐29C‐1.....................................................................2067‐29C‐2.....................................................................2047‐2A‐14.......................................................................687‐2A‐15.......................................................................537‐2A‐16.....................................................................2057‐2A‐17.1.................................................................1027‐2A‐18.......................................................................817‐2A‐19.....................................................................1477‐2A‐21.....................................................................1737‐2A‐22.......................................................................337‐2A‐23.......................................................................487‐2A‐24.......................................................................887‐2A‐25.......................................................................257‐2A‐26.......................................................................317‐2A‐27.....................................................................1877‐2A‐4(A).................................................................2047‐2A‐4(B).................................................................2247‐2A‐4(C).................................................................1967‐2A‐8........................................................................2037‐2A‐8.6....................................................................1417‐2A‐8.8....................................................................188

7‐2A‐8.9.......................................................................667‐2D‐8.1...................................................................1867‐2E‐1.1....................................................................1537‐2F‐1...........................................................................847‐31‐27.....................................................................2097‐31‐4(A)(4)..........................................................1327‐31‐4(A)(5)..........................................................1327‐31‐4(A)(6)..........................................................1197‐31‐4(A)(7)..........................................................1197‐33‐7........................................................................2117‐4‐10...................................................................40,427‐7‐3(B)....................................................................2297‐7‐4(D)...................................................................2127‐9‐100........................................................................627‐9‐101........................................................................767‐9‐102........................................................................767‐9‐103........................................................................787‐9‐103.1....................................................................797‐9‐103.2....................................................................807‐9‐104.....................................................................1247‐9‐105.....................................................................1357‐9‐106.....................................................................1167‐9‐107.....................................................................1427‐9‐108.....................................................................1007‐9‐109.....................................................................2497‐9‐110.1.................................................................1057‐9‐110.2.................................................................1057‐9‐111........................................................................927‐9‐112.....................................................................1677‐9‐114........................................................................277‐9‐115........................................................................897‐9‐13.3....................................................................2257‐9‐13.4....................................................................1627‐9‐13.5....................................................................2007‐9‐15........................................................................1637‐9‐16........................................................................1257‐9‐17........................................................................2387‐9‐18........................................................................2407‐9‐18.1....................................................................2017‐9‐19........................................................................2437‐9‐20........................................................................2447‐9‐22........................................................................2377‐9‐22.1....................................................................1957‐9‐23........................................................................2377‐9‐23.1....................................................................1957‐9‐24........................................................................2437‐9‐25........................................................................1987‐9‐26........................................................................2027‐9‐26.1.......................................................................877‐9‐27........................................................................213


7‐9‐28........................................................................2127‐9‐29........................................................................1267‐9‐30........................................................................1457‐9‐31........................................................................2177‐9‐32........................................................................2127‐9‐33........................................................................2147‐9‐34........................................................................2167‐9‐35........................................................................2117‐9‐36........................................................................2447‐9‐37........................................................................2447‐9‐38........................................................................2487‐9‐38.1....................................................................2087‐9‐39..........................................................................837‐9‐40(A).................................................................1447‐9‐40(B).................................................................2427‐9‐41........................................................................2167‐9‐41.1....................................................................1937‐9‐41.3......................................................................717‐9‐41.4....................................................................1307‐9‐46........................................................................2227‐9‐47........................................................................2217‐9‐48........................................................................2177‐9‐49........................................................................2207‐9‐50........................................................................2107‐9‐51........................................................................1977‐9‐52........................................................................1987‐9‐52.1....................................................................2107‐9‐53........................................................................2467‐9‐54........................................................................2477‐9‐54.1....................................................................2187‐9‐54.2....................................................................1707‐9‐54.3....................................................................1897‐9‐54.4....................................................................1717‐9‐54.5....................................................................1787‐9‐55........................................................................2327‐9‐56........................................................................2337‐9‐56.1....................................................................2077‐9‐56.2......................................................................967‐9‐56.3......................................................................497‐9‐57........................................................................1587‐9‐57.1....................................................................2217‐9‐57.2....................................................................1617‐9‐58........................................................................2427‐9‐59........................................................................2447‐9‐60........................................................................1637‐9‐61.1....................................................................1047‐9‐61.2....................................................................1667‐9‐62........................................................................1557‐9‐62.1......................................................................357‐9‐63........................................................................143

7‐9‐64........................................................................1227‐9‐65........................................................................1977‐9‐66........................................................................2417‐9‐66.1....................................................................1467‐9‐67........................................................................2347‐9‐68........................................................................2387‐9‐69........................................................................2407‐9‐70........................................................................2387‐9‐71........................................................................2327‐9‐73........................................................................2467‐9‐73.1.......................................................................747‐9‐73.2....................................................................1407‐9‐74........................................................................2097‐9‐75........................................................................2237‐9‐76........................................................................2487‐9‐76.1....................................................................2457‐9‐76.2....................................................................2007‐9‐77........................................................................1557‐9‐77.1....................................................................1117‐9‐78........................................................................2357‐9‐78.1....................................................................1807‐9‐79........................................................................2257‐9‐79.1....................................................................2257‐9‐79.2.......................................................................457‐9‐83........................................................................1017‐9‐84........................................................................1017‐9‐85........................................................................1287‐9‐86........................................................................1657‐9‐87........................................................................1077‐9‐88.1....................................................................2307‐9‐88.2....................................................................2297‐9‐89........................................................................1927‐9‐90........................................................................1817‐9‐91...........................................................................657‐9‐92........................................................................1597‐9‐93...........................................................................907‐9‐94........................................................................1177‐9‐95...........................................................................447‐9‐96........................................................................2417‐9‐96.1.......................................................................727‐9‐96.2....................................................................2357‐9‐97........................................................................2157‐9‐98...........................................................................467‐9‐99...........................................................................637‐9A‐1..........................................................................987‐9C‐10.....................................................................2237‐9C‐2(E)(2)...........................................................2307‐9C‐6.......................................................................2497‐9C‐7.......................................................................2187‐9C‐8.......................................................................231


7‐9C‐9........................................................................1947‐9E‐1........................................................................1037‐9F‐1........................................................................1777‐9G‐1..........................................................................93

7‐9G‐2..........................................................................257‐9H‐1.......................................................................1497‐9I‐5............................................................................297‐9J................................................................................36

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