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SPONSOR: |
SFC |
DATE
TYPED: |
|
HB |
|
||
SHORT
TITLE: |
Clinical
Laboratories Gross Receipts |
SB |
213
& 702/SFCS |
||||
|
ANALYST: |
Smith |
|||||
REVENUE
Estimated Revenue |
Recurring or Non-Rec |
Fund Affected |
|||
FY04 |
FY05 |
FY06 |
FY07 |
|
|
(320.0) |
(665.0) |
(1,100.0) |
|
Recurring |
General Fund |
(250.0) |
(520.0) |
(860.0) |
|
Recurring |
Local Governments |
Responses Received From
TRD
SUMMARY
Synopsis of
Bill
Senate Finance Committee Substitute for Senate Bills 213 and
702 amends Section 7-9-77.1 NMSA 1978 to provide a gross receipts tax deduction
for Medicare receipts of clinical laboratories accredited pursuant to the federal
Clinical Laboratory Improvement Act (42 USCA 263a) and home health agencies
licensed by the Department of Health and certified by the federal Centers for
Medicare and Medicaid Services (CMMS).
The deduction is phased-in over three years with the full deduction
scheduled for fiscal year 2006.
The
section is further amended to specify that medical doctors licensed pursuant to
Section 66-6-13 (Licensure by Endorsement) and osteopaths licensed pursuant to
Section 66-10-12 (Licensure without Examination) qualify for the current Medicare
deduction.
A
minor change in terminology from “osteopaths” to “osteopathic physicians” is
also made.
FISCAL IMPLICATIONS
TRD relied on data
from the 1997 Census of Healthcare Services in
Qualified clinical
laboratories are expected to generate revenues in excess of $110 million and
pay approximately $6.7 million in state and local gross receipts taxes in
fiscal year 2004. This estimate assumes approximately 15% of qualified
laboratories’ receipts are derived from Medicare payments.
Data
from the CMMS show that Medicare payments to
There are no
fiscal implications associated with the licensing provisions.
OTHER SUBSTANTIVE ISSUES
TRD makes a
variety of tax policy arguments:
1. Targeting preferential tax treatment to
specific industries is not necessarily good tax policy. It raises questions of
equity and increases the pressure to extend relief to others by setting a precedent
that they may use to justify similar tax breaks.
2. This bill proposes a tax deduction for a
“merit good”. However, the Gross Receipts and Compensating Tax Act taxes many
otherwise meritorious goods and services, and exempts other meritorious goods
and services. The Gross Receipts and Compensating Tax Act treats some medical
services as meritorious, and certainly provides extensive tax relief for most
charitable organizations. The state has
traditionally had a very broad transaction tax base with a fairly low tax
rate. Narrowing the base eventually
leads to increasing rates in order to maintain revenue, or results in reduced
public services.
3. This continues a trend over the last decade
of removing medical and hospital services from the gross receipts base. A broad base helps to limit the tax rate,
thus cutting the tax base may shift a noticeable amount of tax burden to
remaining taxpayers.
4. The proposal provides a deduction for
payments received for medical services provided by a clinical laboratory
to Medicare beneficiaries. It is
probably more accurate to say that a clinical laboratory provides ‘laboratory’
services, rather than medical services, as the term ‘medical services’ implies
the direct provision of patient care. If
the drafters want to retain the term ‘medical services’ then it is probably
more accurate to say “ancillary medical services provided by a clinical
laboratory to Medicare beneficiaries.”
SS/njw:yr