New Mexico Mulls New Tax on Credit Unions
Credit unions in New Mexico, which have just defeated one bank-backed income tax initiative, face a new fight as a tax-reform commission prepares recommendations for a special fall session of the Legislature.
The credit union lobby easily deflected a legislative proposal to apply New Mexico's income tax to state-chartered credit unions with assets of $100 million or more. But the 23-member Blue Ribbon Tax Reform Commission, appointed this year by Gov. Bill Richardson, is exploring a plan to repeal credit unions' exemption from the gross-receipts tax.
That proposal, also supported by the banking lobby, would apply to New Mexico's 5.85% tax on credit union purchases of equipment and furnishings and to fees assessed for services such as safety deposit boxes, cashier's checks, and use of automated teller machines.
Cost estimates for an additional tax range widely: The commission has presented estimates of as much as $2 million a year for the 26 state-chartered credit unions, but officials at New Mexico's Credit Union League believe the price tag would be much lower, between $250,000 and $500,000.
As nonprofits, credit unions are not subject to the gross-receipts tax. A repeal of the exemption could net the state tens of millions of dollars in new revenues, including as much as $75 million from Los Alamos National Laboratory, a Department of Energy facility that is managed by the University of California.
Still, because New Mexico is one of the few states without a budget crisis, Tracy Rock, the chief lobbyist for the league, said she is confident that credit unions will make a convincing argument against the repeal.
Another compromise being discussed, according to Ms. Rock, is rolling back or eliminating the gross-receipts tax for banks to put them on an equal footing with credit unions.