Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports if they are used for other purposes.

 

Current FIRs (in HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us).  Adobe PDF versions include all attachments, whereas HTML versions may not.  Previously issued FIRs and attachments may also be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

 

F I S C A L    I M P A C T    R E P O R T

 

 

 

SPONSOR

Cisneros

DATE TYPED

2/11/04

HB

 

 

SHORT TITLE

Income Tax Relief and Raising Tax on Oil

SB

627

 

 

ANALYST

Taylor

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY04

FY05

(1,250.0)

1.500.0

4.400.0

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

 

SOURCES OF INFORMATION

 

LFC Files

 

Response Received From

Taxation and Revenue Department

 

SUMMARY

 

Senate Bill 627 provides income tax relief for single parent households and for additional persons who are over 65 or blind.  It increases the oil and gas school tax rate on oil and carbon dioxide production.

 

The tax relief provided for single parent households is achieved by making income tax brackets and rates for “head of household” filers the same as those for “married filing joint”.

 

Additional relief is provided for some elderly by ending the current phase-out of the exemption for higher income taxpayers who would now be provided a $2,500 exemption regardless of income.  Currently, the exemptions (of $1,000.0) are completely phased out at incomes greater than $28,500 for single individuals and $45 thousand for heads of households, surviving spouses and married individuals.  

 

The emergency school tax amendments increase the tax rate on oil and carbon dioxide from 3.15 percent of taxable value to 4.0 percent--the same rate imposed on gas production.  The reduced rates provided for stripper wells are increased proportionately.

 

 

The income tax provisions of the bill are applicable beginning in 2004.  The higher rates for the emergency school tax are effective as of July 1, 2004 (FY05).

 

FISCAL IMPLICATIONS

 

TRD’s report shows the following impacts for the various components of the bill. 

 

 

Provision

Estimated Impact on Revenues

 

Subsequent

 

 

 

FY 2004

FY 2005

Years

Funds Affected

 

 

Exemption for Seniors

(1,000)

(9,000)

(7,000)

General Fund

 

Single parent relief

(250)

(4,500)

(2,000)

General Fund

 

School tax increase

None

15,000

13,400

General Fund

 

Total

(1,250)

1,500

4,400

General Fund

 

The income tax provisions are shown decreasing in subsequent years, reflecting the phased-in income tax reductions.  The school tax provision is also shown decreasing in subsequent years.  This is due to assumed lower oil prices.

 

ADMINISTRATIVE IMPLICATIONS

 

TRD reports that the administrative impacts are relatively minor and can be managed with existing resources.

 

 

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