TAX NEWS - 2010

New Mexico Tax: Guv candidates support revealing cost of tax credits, tax exemptions and tax deductions

New Mexico is one of nine states without a tax expenditure budget

Does a report that lists how much the state forgoes in revenue each year because of existing tax credits, exemptions and deductions stand a better shot at becoming law under the next governor?

Looks like.

Both candidates for governor support what's called a tax expenditure report, a tool supporters tout as a way to reveal the hidden costs of the hundreds of tax credits, exemptions and deductions approved by the state over the years.

New Mexico is one of a handful of states nationally to not compile even a bare-bones compilation of tax expenditures, prompting supporters to a push for such a creation.

GOP gubernatorial candidate Susana Martinez became the latest to endorse the idea Tuesday at a news conference in Albuquerque.

"Absolutely, transparency is very important to the citizens of New Mexico," Martinez said in response to a question about supporting a tax expenditure budget. "They want to know where their tax dollars are or aren't going. And they want to make sure they understand where the tax incentives are going. Transparency is important. We have not had that in seven and a half years."

Denish, who endorsed a similar plan in March, didn't let Martinez's attack go unanswered.

"While Susana Martinez talks a big game, she's a little late to the party," Denish was quoted as saying in a statement released by her campaign Wednesday. "These are ideas I have been pushing for months, if not years."

"I support increased transparency with regard to all of government's workings and tax transparency is no exception," Denish said in the statement. "I believe the Sunshine Portal, which I fought to pass and signed into law, is a perfect repository for all government information and as governor I would expand the Sunshine Portal to include all information regarding how taxpayer dollars are spent."

Advocates of the concept have argued during recent legislative sessions that a tax-expenditure report would stoke a necessary public debate over whether certain tax credits, exemptions and deductions had outlived their usefulness.

The state forgoes revenue on portions of goods and services that qualify for tax credits, exemptions and deductions.

Supporters also have said that at a time when New Mexico is hurting financially eliminating certain credits, exemptions and deductions would bring in extra revenue to the state and reduce cuts to crucial programs.

Opponents have urged against such a report, in part, because tax policy is incredibly complex.

Some have expressed concern that the public wouldn't understand the need for some exemptions.It is standard practice for governments to use exemptions, deductions and tax credits to encourage or discourage behavior. For example, many states have tax credits and exemptions to spur economic development, or the purchase of more fuel-efficient vehicles.

According to a 2009 survey, New Mexico is one of only nine states across the nation that doesn't even produce a bare-bones tax expenditure report, even though the concept has support on the political left — the Washington-based Center on Budget and Policy Priorities — and the political right — the Washington-based Tax Foundation.

While Denish and Martinez support the idea, that doesn't mean the idea is a slam dunk in 2011.

The idea might face a chilly reception from New Mexico lawmakers, who've let the idea languish during recent legislative sessions.

But they haven't been the only stumbling block.  A bill that made it to Gov. Bill Richardson's desk in 2007 would have required the state's Taxation and Revenue Department to issue an annual list of all the tax revenue that is not collected. Richardson vetoed it.