0001| SENATE BILL 20 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| Carlos Cisneros | 0005| | 0006| | 0007| | 0008| FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE | 0009| | 0010| AN ACT | 0011| RELATING TO TAXATION; REDUCING PERSONAL INCOME TAX RATES; | 0012| INCREASING AND EXPANDING ELIGIBILITY FOR LOW-INCOME TAX | 0013| REBATES; PROVIDING A DEDUCTION FROM GROSS RECEIPTS AND | 0014| GOVERNMENTAL GROSS RECEIPTS FOR RECEIPTS FROM THE SALE OF | 0015| PRESCRIPTION DRUGS; ABOLISHING THE PRESCRIPTION DRUG TAX | 0016| CREDIT; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA | 0017| 1978. | 0018| | 0019| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0020| Section 1. Section 7-2-7 NMSA 1978 (being Laws 1994, | 0021| Chapter 5, Section 20) is amended to read: | 0022| "7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by | 0023| Section 7-2-3 NMSA 1978 shall be at the following rates for | 0024| any taxable year beginning on or after January 1, ~[1996]~ | 0025| |1998|: | - 1 - 0001| A. For married individuals filing separate | 0002| returns: | 0003| If the taxable income is: The tax shall be: | 0004| ~[Not over $4,000 1.7% of taxable income | 0005| Over $ 4,000 but not over $ 8,000 $ 68.00 plus 3.2% of | 0006| excess over $ 4,000 | 0007| Over $ 8,000 but not over $ 12,000 $ 196 plus 4.7% of | 0008| excess over $ 8,000 | 0009| Over $ 12,000 but not over $ 20,000 $ 384 plus 6.0% of | 0010| excess over $ 12,000 | 0011| Over $ 20,000 but not over $ 32,000 $ 864 plus 7.1% of | 0012| excess over $ 20,000 | 0013| Over $ 32,000 but not over $ 50,000 $ 1,716 plus 7.9% of | 0014| excess over $ 32,000 | 0015| Over $ 50,000 $ 3,138 plus 8.5% of | 0016| excess over $ 50,000]~ | 0017| |Not over $4,000| | 1.6% of | 0018| taxable income| | 0019| Over $ 4,000 but not over $ 8,000 |$ 64.00 plus 3.1% of| | 0020| |excess over $ 4,000| | 0021| Over $ 8,000 but not over $ 12,000 |$ 188 plus 4.5% of| | 0022| |excess over $ 8,000| | 0023| Over $ 12,000 but not over $ 20,000 |$ 368 plus 5.8% of| | 0024| |excess over $ 12,000| | 0025| Over $ 20,000 but not over $ 32,000 |$ 832 plus 6.8% of| | - 2 - 0001| |excess over $ 20,000| | 0002| Over $ 32,000 but not over $ 50,000 |$ 1,648 plus 7.6% of| | 0003| excess over $ 32,000 | 0004| |Over $ 50,000| |$ 3,016 plus 7.9% of| | 0005| |excess over $ | 0006| 50,000|. | 0007| B. For surviving spouses and married individuals | 0008| filing joint returns: | 0009| If the taxable income is: The tax shall be: | 0010| ~[Not over $8,000 1.7% of taxable income | 0011| Over $ 8,000 but not over $ 16,000 $ 136 plus 3.2% of | 0012| excess over $ 8,000 | 0013| Over $ 16,000 but not over $ 24,000 $ 392 plus 4.7% of | 0014| excess over $ 16,000 | 0015| Over $ 24,000 but not over $ 40,000 $ 768 plus 6.0% of | 0016| excess over $ 24,000 | 0017| Over $ 40,000 but not over $ 64,000 $ 1,728 plus 7.1% of | 0018| excess over $ 40,000 | 0019| Over $ 64,000 but not over $100,000 $ 3,432 plus 7.9% of| | 0020| |excess over $ 64,000 | 0021| Over $100,000 $ 6,276 plus 8.5% of | 0022| excess over $100,000]~ | 0023| |Not over $8,000| |1.6% of | 0024| taxable income| | 0025| Over $ 8,000 but not over $ 16,000 |$ 128 plus 3.1% of| | - 3 - 0001| |excess over $ 8,000| | 0002| Over $ 16,000 but not over $ 24,000 |$ 376 plus 4.5% of| | 0003| |excess over $ 16,000| | 0004| Over $ 24,000 but not over $ 40,000 |$ 736 plus 5.8% of| | 0005| |excess over $ 24,000| | 0006| Over $ 40,000 but not over $ 64,000 |$ 1,664 plus 6.8% of| | 0007| |excess over $ 40,000| | 0008| Over $ 64,000 but not over $100,000 |$ 3,296 plus 7.6% of| | 0009| |excess over $ 64,000| | 0010| Over $100,000 |$ 6,032 plus 7.9% of| | 0011| |excess over | 0012| $100,000|. | 0013| C. For single individuals and for estates and | 0014| trusts: | 0015| If the taxable income is: The tax shall be: | 0016| ~[Not over $5,500 1.7% of taxable income | 0017| Over $ 5,500 but not over $ 11,000 $ 93.50 plus 3.2% of | 0018| excess over $ 5,500 | 0019| Over $ 11,000 but not over $ 16,000 $ 269.50 plus 4.7% of | 0020| excess over $ 11,000 | 0021| Over $ 16,000 but not over $ 26,000 $ 504.50 plus 6.0% of | 0022| excess over $ 16,000 | 0023| Over $ 26,000 but not over $ 42,000 $1,104.50 plus 7.1% of | 0024| excess over $ 26,000 | 0025| Over $ 42,000 but not over $ 65,000 $2,240.50 plus 7.9% of | - 4 - 0001| excess over $ 42,000 | 0002| Over $ 65,000 $4,057.50 plus 8.5% of | 0003| excess over $ 65,000]~ | 0004| |Not over $5,500| |1.6% of | 0005| taxable income | 0006| Over $ 5,500 but not over $ 11,000 $ 88.00 plus 3.1% | 0007| of| |excess over $ 5,500| | 0008| Over $ 11,000 but not over $ 16,000 |$ 258.50 plus 4.5% | 0009| of| |excess over $ 11,000| | 0010| Over $ 16,000 but not over $ 26,000 |$ 483.50 plus 5.8% | 0011| of| |excess over $ 16,000| | 0012| Over $ 26,000 but not over $ 42,000 |$1,063.50 plus 6.8% | 0013| of| |excess over $ 26,000| | 0014| Over $ 42,000 but not over $ 65,000 |$2,151.50 plus 7.6% | 0015| of| | excess over $ 42,000 | 0016| Over $ 65,000| |$3,899.50 plus 7.9% | 0017| of| |excess over $ | 0018| 65,000|. | 0019| D. For heads of household filing returns: | 0020| If the taxable income is: The tax shall be: | 0021| ~[Not over $7,000 1.7% of taxable income | 0022| Over $ 7,000 but not over $ 14,000 $ 119 plus 3.2% of | 0023| excess over $ 7,000 | 0024| Over $ 14,000 but not over $ 20,000 $ 343 plus 4.7% of | 0025| excess over $ 14,000 | - 5 - 0001| Over $ 20,000 but not over $ 33,000 $ 625 plus 6.0% of | 0002| excess over $ 20,000 | 0003| Over $ 33,000 but not over $ 53,000 $1,405 plus 7.1% of | 0004| excess over $ 33,000 | 0005| Over $ 53,000 but not over $ 83,000 $2,825 plus 7.9% of | 0006| excess over $ 53,000 | 0007| Over $ 83,000 $5,195 plus 8.5% of | 0008| excess over $ 83,000]~ | 0009| |Not over $7,000| |1.6% of | 0010| taxable income| | 0011| Over $ 7,000 but not over $ 14,000 |$ 112 plus 3.1% of| | 0012| |excess over $ 7,000| | 0013| Over $ 14,000 but not over $ 20,000 |$ 329 plus 4.5% of| | 0014| |excess over $ 14,000| | 0015| Over $ 20,000 but not over $ 33,000 |$ 599 plus 5.8% of| | 0016| | excess over $ 20,000| | 0017| Over $ 33,000 but not over $ 53,000 |$1,353 plus 6.8% of| | 0018| |excess over $ 33,000| | 0019| Over $ 53,000 but not over $ 83,000 |$2,713 plus 7.6% of| | 0020| |excess over $ 53,000| | 0021| Over $ 83,000 |$4,993 plus 7.9% of| | 0022| |excess over $ | 0023| 83,000|. | 0024| E. The tax on the sum of any lump-sum amounts | 0025| included in net income is an amount equal to five multiplied | - 6 - 0001| by the difference between: | 0002| (1) the amount of tax due on the taxpayer's | 0003| taxable income; and | 0004| (2) the amount of tax that would be due on an | 0005| amount equal to the taxpayer's taxable income and twenty | 0006| percent of the taxpayer's lump-sum amounts included in net | 0007| income." | 0008| Section 2. Section 7-2-14 NMSA 1978 (being Laws 1972, | 0009| Chapter 20, Section 2, as amended) is amended to read: | 0010| "7-2-14. LOW-INCOME COMPREHENSIVE TAX REBATE.-- | 0011| A. Except as otherwise provided in Subsection B of | 0012| this section, any resident who files an individual New Mexico | 0013| income tax return and who is not a dependent of another | 0014| individual may claim a tax rebate for a portion of state and | 0015| local taxes to which the resident has been subject during the | 0016| taxable year for which the return is filed. The tax rebate | 0017| may be claimed even though the resident has no income taxable | 0018| under the Income Tax Act. A husband and wife who file | 0019| separate returns for a taxable year in which they could have | 0020| filed a joint return may each claim only one-half of the tax | 0021| rebate that would have been allowed on a joint return. | 0022| B. No claim for the tax rebate provided in this | 0023| section shall be filed by a resident who was an inmate of a | 0024| public institution for more than six months during the taxable | 0025| year for which the tax rebate could be claimed or who was not | - 7 - 0001| physically present in New Mexico for at least six months | 0002| during the taxable year for which the tax rebate could be | 0003| claimed. | 0004| C. For the purposes of this section, the total | 0005| number of exemptions for which a tax rebate may be claimed or | 0006| allowed is determined by adding the number of federal | 0007| exemptions allowable for federal income tax purposes for each | 0008| individual included in the return who is domiciled in New | 0009| Mexico plus two additional exemptions for each individual | 0010| domiciled in New Mexico included in the return who is | 0011| sixty-five years of age or older plus one additional exemption | 0012| for each individual domiciled in New Mexico included in the | 0013| return who, for federal income tax purposes, is blind plus one | 0014| exemption for each minor child or stepchild of the resident | 0015| who would be a dependent for federal income tax purposes if | 0016| the public assistance contributing to the support of the child | 0017| or stepchild was considered to have been contributed by the | 0018| resident. | 0019| D. The tax rebate provided for in this section may | 0020| be claimed in the amount shown in the following table: | 0021| Modified gross And the total number | 0022| income is: of exemptions is: | 0023| But Not 6 or | 0024| Over Over 1 2 3 4 5 More | 0025| ~[$ 0 $ 500 $120 $150 $175 $200 $225 $320 | - 8 - 0001| 500 1,000 135 185 225 265 300 415 | 0002| 1,000 1,500 135 190 235 290 325 435 | 0003| 1,500 2,000 135 190 235 290 325 450 | 0004| 2,000 2,500 135 190 240 290 325 450 | 0005| 2,500 3,000 135 190 240 290 325 450 | 0006| 3,000 3,500 135 190 240 290 325 450 | 0007| 3,500 4,000 135 190 240 300 335 450 | 0008| 4,000 4,500 135 190 240 300 355 450 | 0009| 4,500 5,000 115 150 205 300 355 450 | 0010| 5,000 5,500 95 130 165 260 355 430 | 0011| 5,500 6,000 75 110 145 220 315 410 | 0012| 6,000 6,500 55 90 125 180 275 370 | 0013| 6,500 7,000 35 70 105 140 235 330 | 0014| 7,000 7,500 15 50 85 120 195 290 | 0015| 7,500 8,000 10 20 50 80 130 220 | 0016| 8,000 8,500 10 20 30 60 90 180 | 0017| 8,500 9,000 10 20 30 40 70 140 | 0018| 9,000 9,500 10 20 30 40 60 100 | 0019| 9,500 10,000 10 20 30 40 50 80 | 0020| 10,000 10,500 10 20 30 40 50 60 | 0021| 10,500 11,000 10 20 30 40 50 60 | 0022| 11,000 11,500 10 20 30 40 50 60 | 0023| 11,500 12,000 5 10 15 20 25 30 | 0024| 12,000 12,500 5 10 15 20 25 30 | 0025| 12,500 13,000 5 10 15 20 25 30 | - 9 - 0001| 13,000 13,500 5 10 15 20 25 30 | 0002| 13,500 14,000 5 10 15 20 25 30]~ | 0003| |$ 0 $ 500 $ 145 $ 180 $ 210 $ 240 $ 270 $ 350 | 0004| 500 1,000 165 225 270 320 350 450 | 0005| 1,000 1,500 165 230 290 350 390 480 | 0006| 1,500 2,000 165 230 290 350 390 495 | 0007| 2,000 2,500 165 230 290 350 390 495 | 0008| 2,500 3,000 165 230 290 350 390 495 | 0009| 3,000 3,500 165 230 290 350 390 495 | 0010| 3,500 4,000 165 230 290 350 390 495 | 0011| 4,000 4,500 165 230 290 350 390 495 | 0012| 4,500 5,000 140 180 250 330 380 470 | 0013| 5,000 5,500 115 160 200 315 370 455 | 0014| 5,500 6,000 90 135 175 265 340 435 | 0015| 6,000 6,500 80 125 165 240 330 395 | 0016| 6,500 7,000 70 110 150 220 300 370 | 0017| 7,000 7,500 70 110 150 220 300 370 | 0018| 7,500 8,000 55 110 165 220 275 330 | 0019| 8,000 8,500 55 110 165 220 275 330 | 0020| 8,500 9,000 45 90 135 180 225 270 | 0021| 9,000 9,500 40 80 120 160 200 240 | 0022| 9,500 10,000 40 80 120 160 200 240 | 0023| 10,000 10,500 30 60 90 120 150 180 | 0024| 10,500 11,000 30 60 90 120 150 180 | 0025| 11,000 11,500 30 60 90 120 150 180 | - 10 - 0001| 11,500 12,000 30 60 90 120 150 180 | 0002| 12,000 12,500 25 50 75 100 125 150 | 0003| 12,500 13,000 25 50 75 100 125 150 | 0004| 13,000 13,500 25 50 75 100 125 150 | 0005| 13,500 14,000 25 50 75 100 125 150 | 0006| 14,000 14,500 25 50 75 100 125 150 | 0007| 14,500 15,000 25 50 75 100 125 150 | 0008| 15,000 15,500 20 40 60 80 100 120 | 0009| 15,500 16,000 20 40 60 80 100 120 | 0010| 16,000 16,500 20 40 60 80 100 120 | 0011| 16,500 17,000 20 40 60 80 100 120 | 0012| 17,000 17,500 20 40 60 80 100 120 | 0013| 17,500 18,000 20 40 60 80 100 120|. | 0014| E. If a taxpayer's modified gross income is zero, | 0015| the taxpayer may claim a credit in the amount shown in the | 0016| first row of the table appropriate for the taxpayer's number | 0017| of exemptions. | 0018| F. The tax rebates provided for in this section may | 0019| be deducted from the taxpayer's New Mexico income tax | 0020| liability for the taxable year. If the tax rebates exceed the | 0021| taxpayer's income tax liability, the excess shall be refunded | 0022| to the taxpayer. | 0023| G. For purposes of this section, "dependent" means | 0024| "dependent" as defined by Section 152 of the Internal Revenue | 0025| Code of 1986, as that section may be amended or renumbered, | - 11 - 0001| but also includes any minor child or stepchild of the resident | 0002| who would be a dependent for federal income tax purposes if | 0003| the public assistance contributing to the support of the child | 0004| or stepchild was considered to have been contributed by the | 0005| resident." | 0006| Section 3. Section 7-9-3 NMSA 1978 (being Laws 1978, | 0007| Chapter 46, Section 1, as amended) is amended to read: | 0008| "7-9-3. DEFINITIONS.--As used in the Gross Receipts and | 0009| Compensating Tax Act: | 0010| A. "department" means the taxation and revenue | 0011| department, the secretary of taxation and revenue or any | 0012| employee of the department exercising authority lawfully | 0013| delegated to that employee by the secretary; | 0014| B. "buying" or "selling" means any transfer of | 0015| property for consideration or any performance of service for | 0016| consideration; | 0017| C. "construction" means building, altering, | 0018| repairing or demolishing in the ordinary course of business | 0019| any: | 0020| (1) road, highway, bridge, parking area or | 0021| related project; | 0022| (2) building, stadium or other structure; | 0023| (3) airport, subway or similar facility; | 0024| (4) park, trail, athletic field, golf course | 0025| or similar facility; | - 12 - 0001| (5) dam, reservoir, canal, ditch or similar | 0002| facility; | 0003| (6) sewerage or water treatment facility, | 0004| power generating plant, pump station, natural gas compressing | 0005| station, gas processing plant, coal gasification plant, | 0006| refinery, distillery or similar facility; | 0007| (7) sewerage, water, gas or other pipeline; | 0008| (8) transmission line; | 0009| (9) radio, television or other tower; | 0010| (10) water, oil or other storage tank; | 0011| (11) shaft, tunnel or other mining | 0012| appurtenance; | 0013| (12) microwave station or similar facility; | 0014| or | 0015| (13) similar work; | 0016| "construction" also means: | 0017| (14) leveling or clearing land; | 0018| (15) excavating earth; | 0019| (16) drilling wells of any type, including | 0020| seismograph shot holes or core drilling; or | 0021| (17) similar work; | 0022| D. "financial corporation" means any savings and | 0023| loan association or any incorporated savings and loan company, | 0024| trust company, mortgage banking company, consumer finance | 0025| company or other financial corporation; | - 13 - 0001| E. "engaging in business" means carrying on or | 0002| causing to be carried on any activity with the purpose of | 0003| direct or indirect benefit; | 0004| F. "gross receipts" means the total amount of money | 0005| or the value of other consideration received from selling | 0006| property in New Mexico, from leasing property employed in New | 0007| Mexico, from selling services performed outside New Mexico the | 0008| product of which is initially used in New Mexico or from | 0009| performing services in New Mexico. In an exchange in which | 0010| the money or other consideration received does not represent | 0011| the value of the property or service exchanged, "gross | 0012| receipts" means the reasonable value of the property or | 0013| service exchanged. | 0014| (1) "Gross receipts" includes: | 0015| (a) any receipts from sales of tangible | 0016| personal property handled on consignment; | 0017| (b) the total commissions or fees | 0018| derived from the business of buying, selling or promoting the | 0019| purchase, sale or leasing, as an agent or broker on a | 0020| commission or fee basis, of any property, service, stock, bond | 0021| or security; | 0022| (c) amounts paid by members of any | 0023| cooperative association or similar organization for sales or | 0024| leases of personal property or performance of services by such | 0025| organization; and | - 14 - 0001| (d) amounts received from transmitting | 0002| messages or conversations by persons providing telephone or | 0003| telegraph services. | 0004| (2) "Gross receipts" excludes: | 0005| (a) cash discounts allowed and taken; | 0006| (b) New Mexico gross receipts tax, | 0007| governmental gross receipts tax and leased vehicle gross | 0008| receipts tax payable on transactions for the reporting period; | 0009| (c) taxes imposed pursuant to the | 0010| provisions of any local option gross receipts tax that is | 0011| payable on transactions for the reporting period; | 0012| (d) any gross receipts or sales taxes | 0013| imposed by an Indian nation, tribe or pueblo; provided that | 0014| the tax is approved, if approval is required by federal law or | 0015| regulation, by the secretary of the interior of the United | 0016| States; and provided further that the gross receipts or sales | 0017| tax imposed by the Indian nation, tribe or pueblo provides a | 0018| reciprocal exclusion for gross receipts, sales or gross | 0019| receipts-based excise taxes imposed by the state or its | 0020| political subdivisions; | 0021| (e) any type of time-price differential; | 0022| and | 0023| (f) amounts received solely on behalf of | 0024| another in a disclosed agency capacity. | 0025| (3) When the sale of property or service is | - 15 - 0001| made under any type of charge, conditional or time-sales | 0002| contract or the leasing of property is made under a leasing | 0003| contract, the seller or lessor may elect to treat all | 0004| receipts, excluding any type of time-price differential, under | 0005| such contracts as gross receipts as and when the payments are | 0006| actually received. If the seller or lessor transfers his | 0007| interest in any such contract to a third person, the seller or | 0008| lessor shall pay the gross receipts tax upon the full sale or | 0009| leasing contract amount, excluding any type of time-price | 0010| differential; | 0011| G. "manufacturing" means combining or processing | 0012| components or materials to increase their value for sale in | 0013| the ordinary course of business, but does not include | 0014| construction; | 0015| H. "person" means: | 0016| (1) any individual, estate, trust, receiver, | 0017| cooperative association, club, corporation, company, firm, | 0018| partnership, limited liability company, limited liability | 0019| partnership, joint venture, syndicate or other entity, | 0020| including any gas, water or electric utility owned or operated | 0021| by a county, municipality or other political subdivision of | 0022| the state; or | 0023| (2) any national, federal, state, Indian or | 0024| other governmental unit or subdivision, or any agency, | 0025| department or instrumentality of any of the foregoing; | - 16 - 0001| I. "property" means real property, tangible | 0002| personal property, licenses, franchises, patents, trademarks | 0003| and copyrights. Tangible personal property includes | 0004| electricity and manufactured homes; | 0005| J. "leasing" means any arrangement whereby, for a | 0006| consideration, property is employed for or by any person other | 0007| than the owner of the property, except that the granting of a | 0008| license to use property is the sale of a license and not a | 0009| lease; | 0010| K. "service" means all activities engaged in for | 0011| other persons for a consideration, which activities involve | 0012| predominantly the performance of a service as distinguished | 0013| from selling or leasing property. "Service" includes | 0014| activities performed by a person for its members or | 0015| shareholders. In determining what is a service, the intended | 0016| use, principal objective or ultimate objective of the | 0017| contracting parties shall not be controlling. "Service" | 0018| includes construction activities and all tangible personal | 0019| property that will become an ingredient or component part of a | 0020| construction project. Such tangible personal property retains | 0021| its character as tangible personal property until it is | 0022| installed as an ingredient or component part of a construction | 0023| project in New Mexico. However, sales of tangible personal | 0024| property that will become an ingredient or component part of a | 0025| construction project to persons engaged in the construction | - 17 - 0001| business are sales of tangible personal property; | 0002| L. "use" or "using" includes use, consumption or | 0003| storage other than storage for subsequent sale in the ordinary | 0004| course of business or for use solely outside this state; | 0005| M. "secretary" means the secretary of taxation and | 0006| revenue or the secretary's delegate; | 0007| N. "manufactured home" means a ~[moveable]~ | 0008| |movable| or portable housing structure for human occupancy | 0009| that exceeds either a width of eight feet or a length of forty | 0010| feet constructed to be towed on its own chassis and designed | 0011| to be installed with or without a permanent foundation; | 0012| O. "initial use" or "initially used" means the | 0013| first employment for the intended purpose and does not include | 0014| the following activities: | 0015| (1) observation of tests conducted by the | 0016| performer of services; | 0017| (2) participation in progress reviews, | 0018| briefings, consultations and conferences conducted by the | 0019| performer of services; | 0020| (3) review of preliminary drafts, drawings | 0021| and other materials prepared by the performer of the services; | 0022| (4) inspection of preliminary prototypes | 0023| developed by the performer of services; or | 0024| (5) similar activities; | 0025| P. "research and development services" means any | - 18 - 0001| activity engaged in for other persons for consideration, for | 0002| one or more of the following purposes: | 0003| (1) advancing basic knowledge in a | 0004| recognized field of natural science; | 0005| (2) advancing technology in a field of | 0006| technical endeavor; | 0007| (3) the development of a new or improved | 0008| product, process or system with new or improved function, | 0009| performance, reliability or quality, whether or not the new or | 0010| improved product, process or system is offered for sale, lease | 0011| or other transfer; | 0012| (4) the development of new uses or | 0013| applications for an existing product, process or system, | 0014| whether or not the new use or application is offered as the | 0015| rationale for purchase, lease or other transfer of the | 0016| product, process or system; | 0017| (5) analytical or survey activities | 0018| incorporating technology review, application, trade-off study, | 0019| modeling, simulation, conceptual design or similar activities, | 0020| whether or not offered for sale, lease or other transfer; or | 0021| (6) the design and development of prototypes | 0022| or the integration of systems incorporating advances, | 0023| developments or improvements included in Paragraphs (1) | 0024| through (5) of this subsection; ~[and]~ | 0025| Q. "local option gross receipts tax" means a tax | - 19 - 0001| authorized to be imposed by a county or municipality upon the | 0002| taxpayer's gross receipts and required to be collected by the | 0003| department at the same time and in the same manner as the | 0004| gross receipts tax; "local option gross receipts tax" includes | 0005| the taxes imposed pursuant to the Municipal Local Option Gross | 0006| Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax | 0007| Act, Special Municipal Gross Receipts Tax Act, County Local | 0008| Option Gross Receipts Taxes Act, Local Hospital Gross Receipts | 0009| Tax Act, County Correctional Facility Gross Receipts Tax Act | 0010| | 0011| and such other acts as may be enacted authorizing counties or | 0012| municipalities to impose taxes on gross receipts, which taxes | 0013| are to be collected by the department; |and| | 0014| |R. "prescription drugs" means insulin and | 0015| substances that are: | 0016| (1) dispensed by or under the supervision of | 0017| a licensed pharmacist or by a physician or other person | 0018| authorized under state law to do so; | 0019| (2) prescribed for a specified person by a | 0020| person authorized under state law to prescribe the substance; | 0021| and | 0022| (3) subject to the restrictions on sale | 0023| contained in Subparagraph 1 of Subsection (b) of 21 USCA | 0024| 353|." | 0025| Section 4. A new section of the Gross Receipts and | - 20 - 0001| Compensating Tax Act is enacted to read: | 0002| "[|NEW MATERIAL|] DEDUCTION--GROSS RECEIPTS TAX AND | 0003| GOVERNMENTAL GROSS RECEIPTS TAX--PRESCRIPTION DRUGS.--Receipts | 0004| from the sale of prescription drugs may be deducted from gross | 0005| receipts and governmental gross receipts." | 0006| Section 5. REPEAL.--Section 7-2-18.3 NMSA 1978 (being | 0007| Laws 1994, Chapter 5, Section 17) is repealed. | 0008| Section 6. APPLICABILITY.-- | 0009| A. The provisions of Sections 1 and 2 of this act | 0010| apply to taxable years beginning on or after January 1, 1998. | 0011| B. The provisions of Section 5 of this act apply | 0012| to taxable years beginning on or after January 1, 1999. | 0013| Section 7. EFFECTIVE DATE.--The effective date of the | 0014| provisions of Sections 3 and 4 of this act is January 1, 1999. | 0015|  |