SENATE BILL 138

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

John M. Sapien

AN ACT

RELATING TO TAXATION; CREATING LIMITED TERM DEDUCTIONS FROM GROSS RECEIPTS AND COMPENSATING TAXES FOR CERTAIN AGRICULTURAL CAPITAL EQUIPMENT PURCHASES AND CONSTRUCTION PROJECTS IN NEW MEXICO.

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

     SECTION 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--COMPENSATING TAX COMPUTATION--CAPITAL INVESTMENTS IN AGRICULTURAL PRODUCTION AND PROCESSING CONSTRUCTION OR EQUIPMENT.--

          A. Until July 1, 2017, the amount of a capital investment made in construction or equipment directly related to agricultural production or processing of agricultural goods may be deducted by the investor in computing compensating tax due. Deductions taken pursuant to this section shall be:

                (1) reported separately from all other deductions; and 

                (2) identified individually as to the amount and nature of the investment for which the deduction is taken.

          B. The purposes of this deduction are to encourage the purchase of agricultural equipment in order to enable greater agricultural production and processing and to stimulate construction or renovation of agricultural processing facilities.

          C. Annually, beginning in 2014, the department shall report to the revenue stabilization and tax policy committee regarding the data compiled from the reports from taxpayers taking the deduction provided in this section and the effectiveness of the deduction in fulfilling its purposes.

          D. As used in this section:

                (1) "agricultural production" means growing, extracting or otherwise producing an agricultural product;

                (2) "capital investment" means an expenditure made on an asset subject to depreciation pursuant to Section 167 of the federal Internal Revenue Code of 1986, not including motor vehicles on which the motor vehicle excise tax would have been paid in lieu of gross receipts tax, if the motor vehicle were purchased in New Mexico; and

                (3) "processing" means refining or changing an agricultural product so that it is marketable or transforming the agricultural product, possibly by combining it with other ingredients, so that value is added before marketing it to consumers."

     SECTION 2. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CAPITAL INVESTMENTS IN AGRICULTURAL PRODUCTION AND PROCESSING CONSTRUCTION OR EQUIPMENT.--

          A. Until July 1, 2017, the amount of a capital investment made in construction or equipment directly related to agricultural production or processing of agricultural goods may be deducted by the investor from the investor's gross receipts in computing the investor's gross receipts tax liability. Deductions taken pursuant to this section shall be:

                (1) reported separately from all other deductions; and 

                (2) identified individually as to the amount and nature of the investment for which the deduction is taken.

          B. The purposes of this deduction are to encourage purchases of agricultural equipment in order to enable greater agricultural production and processing and to stimulate construction or renovation of agricultural processing facilities.

          C. Annually, beginning in 2014, the department shall report to the revenue stabilization and tax policy committee regarding the data compiled from the reports from taxpayers taking the deduction provided in this section and the effectiveness of the deduction in fulfilling its purposes.

          D. As used in this section:

                (1) "agricultural production" means growing, extracting or otherwise producing an agricultural product;

                (2) "capital investment" means an expenditure made on an asset subject to depreciation pursuant to Section 167 of the federal Internal Revenue Code of 1986, not including motor vehicles on which the motor vehicle excise tax is paid in lieu of gross receipts tax; and

                (3) "processing" means refining or changing an agricultural product so that it is marketable or transforming the agricultural product, possibly by combining it with other ingredients, so that value is added before marketing it to consumers."

     SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2012.

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