The Food Tax (Still Again!)

One of the top issues that will come up at the coming session of the New Mexico State Legislature is tax reform--and specifically changes to the gross receipts tax. One proposal would be to reduce the GRT and to remove exemptions that allow some private (larger) business to pay little or no taxes.

In the context of tax reform, anti-hunger advocates will be monitoring one proposal to reinstate a GRT on groceries (also known as the food tax). According to an article in The Albuquerque Journal on Thursday, this tax is likely to come up in the context of the tax overhaul discussion.

One sticking point in the tax overhaul debate will be whether to reinstate the gross receipts tax on food.

There has been fierce opposition to previous proposals to reinstate the food tax – after such a tax was repealed in 2004 – but a tax overhaul bill expected to be filed by Sen. Carlos Cisneros, a Questa Democrat, would do just that, likely starting in 2021.

The bill would be similar in other ways to the legislation that’s expected to be introduced by Trujillo, which would not include a food tax provision.

According to The Journal, Cisneros suggests that the implementation of a food tax would allow for a greater reduction in the general GRT.  That would not be beneficial to low-income families, who while paying a lower GRT on general goods, would now have to pay a tax on groceries.

The Journal article, entitled Tax overhaul high on legislative list, noted that the New Mexico Municipal League, which represents cities and towns statewide, supports at least a partial reinstatement of the food tax.

The Santa Fe-based newspaper The New Mexican quoted Bill Fulginiti, executive director of the NMML. "We advocate for an overall tax-rate reduction combined with a small local tax on food so that taxes generated by food purchases are returned to the community from which they were collected,"

To be fair, we shouldn't dismiss the genuine concerns from financially strapped small communities in New Mexico, which are seeking ways to enhance their sources of revenue. However, implementing a tax that would hurt the poorest families in their communities is not the way to go, especially with the high rates of poverty in rural New Mexico.

Anticipating that the tax would come up again in the 2019 legislative session, Columnist Milan Simonich of The New Mexican newspaper reiterated in December, 2018 that the food tax is a bad idea.

"It’s back in the form of a trial balloon, one that should be burst with gusto," Simonich wrote...Everybody has to buy groceries. The municipal league’s idea would harm people with the smallest incomes, those worrying about how they’re going to put food on the table."   See full article entitled, "Food tax should remain dead and buried"

A regressive tax
The move to reimpose the food tax seems to come up in some form or another almost every legislative session. And each time,  anti-hunger and anti-poverty advocates (including the faith comunity) have spoken against this effort. We covered the opposition to the tax in 2013, 2014, 2015, 2016. Here is a quote from Archbishop John Wester from the Archdiocese of Santa Fe in 2016 

"We have recently seen in the media the discussion in legislative interim hearings of reinstating the food tax. This 'Tortilla Tax', as many have labeled it, only shifts the burden onto the poor and working families.  What makes this idea even more obscene is that New Mexico ranks second highest in the nation for children living in hunger and the first highest for children living in poverty.  Last year, 82% of births in New Mexico were Medicaid-eligible."   

The effort to reinstate the food tax failed in the 2018 legislative session, in part because of broad opposition from a variety of organizations  "The first committee to hear the bill tabled it after hearing opposition from a wide array of stakeholders, including the AARP, the New Mexico Chile Association, the New Mexico Conference of Catholic Bishops, the New Mexico Center on Law and Poverty, the Center for Civic Policy, New Mexico Voices for Children, the National Association of Social Workers, and the New Mexico Coalition of Food Banks," said Santa Fe-based Think New Mexico, which has long opposed efforts to reintroduce the food tax.

Anti-hunger and anti-poverty organizations are ready to push back against the efforts to reimpose the food tax in the current legislative session. "This is really a backward step," said  James Jimenez, executive director of New Mexico Voices for Children, who cited a public opinion poll showing significant opposition to tax on groceries. Read more

“We’re really disappointed it’s even being entertained as a matter of discussion [in 2019] because it simply doesn’t make sense given New Mexico’s historic poverty levels.” added Jimenez.