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SPONSOR: |
Altamirano |
DATE TYPED: |
|
HB |
|
||
SHORT TITLE: |
Lab Gross Receipts Tax Deduction |
SB |
485 |
||||
|
ANALYST: |
Smith |
|||||
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
25,400.0 |
61,000.0 |
Recurring |
General Fund (GRT on Lab) |
|
3,400.0 |
8,100.0 |
Recurring |
General Fund ( |
|
2,300.0 |
5,400.0 |
Recurring |
Local Governments ( |
|
(3,500.0) |
(8,500.0) |
Recurring |
General Fund ( |
|
(2,400.0) |
(5,700.0) |
Recurring |
Local Governments (Resale Deduction) |
|
25,300.0 |
60,600.0 |
Recurring |
Net General Fund |
|
(100.0) |
(300.0) |
Recurring |
Net Local Governments |
(Parenthesis
( ) Indicate Revenue Decreases)
Responses
Received From
TRD
SUMMARY
Synopsis
of Bill
Senate Bill 485 removes
the gross receipts and compensating tax exemptions for a national laboratory
classified as a 501(C)(3) organization (Los Alamos National Laboratory). The bill also amends Section
FISCAL
IMPLICATIONS
TRD
reports that much of the information used to derive the fiscal impact estimate
was obtained from “The Economic Impact of the Department of Energy on the
State of New Mexico-Fiscal Year 1995” published by the Albuquerque
Operations Office of the U.S. Department of Energy. The fiscal impact estimate
assumes a $1.8 billion total contract amount for management services provided
to the Department of Energy in federal fiscal year 2004. Of the total contract amount, approximately
56% is presumed to be taxable gross receipts.
The estimate further assumes more than $220 million in taxable gross
receipts for sellers of tangible personal property to the lab.
The
amendments to Section
Receipts
of selling a service for resale to the laboratory would become deductible under
Section7-9-48 NMSA 1978. Under Section
The
compensating tax potential is limited because the lab contract is structured
for “management services”. Thus most property that would otherwise be subject
to compensating tax pursuant to this proposal, is actually owned by the
Department of Energy. 80% of net
compensating tax collections go to the state general fund, and the remaining
20% is split evenly with the small cities and small counties assistance funds.
CONFLICT,
DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB-317 removes the gross receipts and compensating tax exemptions and
deductions for the national laboratory and distributes the net receipts to the
Public School Fund; HB-316 phases-out the exemptions and deductions in
20% increments and distributes the gross receipts proceeds to the Public School
Fund.
TECHNICAL
ISSUES
TRD
notes that the language inserted on page 5, line 9 may not be totally on point.
Ostensibly, the intent of the change is to exclude gross receipts tax
attributable to the lab from the calculation of the 1.225% share of state gross
receipts tax that would otherwise be allocated to
(beginning
on line 8); "...net receipts for the month attributable to the gross
receipts tax, other than the net receipts attributable to the gross receipts
tax imposed on a national laboratory, from business locations...."
OTHER
SUBSTANTIVE ISSUES
·
This
proposal targets one taxpayer. If it
were to pass, it could conceivably be challenged on equal protection
grounds. However,
·
TRD
notes that this bill explicitly directs revenue derived from local option taxes
to the general fund. Hence, the
effective state gross receipts tax rate on the laboratory is 6.0625%. The department is unaware of any precedent
for this provision.
SS/prr