HOUSE BILL 311

48th legislature - STATE OF NEW MEXICO - second session, 2008

INTRODUCED BY

Roberto "Bobby" J. Gonzales

FOR THE FUNDING FORMULA STUDY TASK FORCE

AN ACT

RELATING TO TAXATION; INCREASING THE RATE OF THE GROSS RECEIPTS TAX AND THE COMPENSATING TAX; DISTRIBUTING THE INCREASED REVENUE TO THE PUBLIC SCHOOL FUND.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] DISTRIBUTION--PUBLIC SCHOOL FUND--GROSS RECEIPTS.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the public school fund in an amount equal to nine and nine hundredths percent of the net receipts attributable to the gross receipts tax prior to any other distributions."

     Section 2. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] DISTRIBUTION--PUBLIC SCHOOL FUND--COMPENSATING TAX.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the public school fund in an amount equal to nine and nine hundredths percent of the net receipts attributable to the compensating tax prior to any other distributions."

     Section 3. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:

     "7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--

          A. For the privilege of engaging in business, an excise tax equal to five and one-half percent of gross receipts is imposed on any person engaging in business in New Mexico.

          B. The tax imposed by this section shall be referred to as the "gross receipts tax"."

     Section 4. Section 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:

     "7-9-7. IMPOSITION AND RATE OF TAX--DENOMINATION AS "COMPENSATING TAX".--

          A. For the privilege of using tangible property in New Mexico, there is imposed on the person using the property an excise tax equal to five and one-half percent of the value of tangible property that was:

                (1) manufactured by the person using the property in the state;

                (2) acquired outside this state as the result of a transaction that would have been subject to the gross receipts tax had it occurred within this state; or

                (3) acquired as the result of a transaction [which] that was not initially subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax but which transaction, because of the buyer's subsequent use of the property, should have been subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax.

          B. For the purpose of Subsection A of this section, value of tangible property shall be the adjusted basis of the property for federal income tax purposes determined as of the time of acquisition or introduction into this state or of conversion to use, whichever is later. If no adjusted basis for federal income tax purposes is established for the property, a reasonable value of the property shall be used.

          C. For the privilege of using services rendered in New Mexico, there is imposed on the person using such services an excise tax equal to five and one-half percent of the value of the services at the time they were rendered. The services, to be taxable under this subsection, must have been rendered as the result of a transaction [which] that was not initially subject to the gross receipts tax but which transaction, because of the buyer's subsequent use of the services, should have been subject to the gross receipts tax.

          D. The tax imposed by this section shall be referred to as the "compensating tax"."

     Section 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2008.

- 4 -