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|
SPONSOR: |
Cervantes |
DATE TYPED: |
02/06/02 |
HB |
369 |
||
|
SHORT TITLE: |
Delete Investment Credit Farming Exception |
SB |
|
||||
|
|
ANALYST: |
Smith |
|||||
REVENUE
|
Estimated Revenue |
Subsequent Years
Impact |
Recurring or Non-Rec |
Fund Affected |
|
|
FY02 |
FY03 |
|
|
|
|
|
($2,000.0) |
|
Recurring |
General
Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis
of Bill
The
bill amends Section 7-9A-3 NMSA 1978 to delete farming from the manufacturing exclusion
for the Purposes of the Investment Credit Act.
FISCAL IMPLICATIONS
TRD notes that the fiscal impact was derived
from the 1997 Census of Agriculture in New Mexico published by the United
States Department of Agriculture (Table
12: Selected Machinery and Equipment on Place and Table 13: Value of Machinery and Equipment on Place). In 1997, there were over 14,000 farms in New
Mexico. This fiscal impact estimate
represents an average of less than $3,000 in qualified equipment per farm.
TECHNICAL ISSUES
TRD notes that the definition of “manufacturing” is
very broad. The bill should clarify any
limitations on what products farmers “manufacture” that would qualify for the
credit. For example, should cattle
feedlots and ranches be considered “manufacturing” for the purposes of qualifying
for the credit?
OTHER SUBSTANTIVE ISSUES
TRD notes the
following issues:
Small farmers would not receive much benefit because their gross receipts, compensating and withholding tax liabilities are so low, and it would probably be difficult for them to meet the employment requirements of Section 7-9A-7.1.
Large
farms could be entitled to significant benefits. In addition to the value of the credit which can be applied
against the taxpayer’s combined gross receipts, compensating and withholding
tax liabilities, Section 7-9A-8 allows a refund of unclaimed investment credit
if: (1) the taxpayer’s available credit is less than $500 thousand, and (2) the
combined tax liability for the previous calendar year was less than 35% of the
taxpayer’s available credit, but more than $10,000.
The statutes currently
allow numerous exemptions and deductions for farmers and ranchers including 1)
an exemption from selling agricultural products, 2) a deduction for feed and fertilizers
and, 3) a deduction for growing, cultivating and processing agricultural
products
[1]Begin typing on the * in replace mode. Do not add or delete spaces.