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F I S C A L I M P A C T R E P O R T

SPONSOR Ortiz y Pino

DATE TYPED 03/18/05 HB

SHORT TITLE

LIQUOR EXCISE TAX WHOLESALER

SURCHARGE

SB 620

ANALYST Padilla-Jackson

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$37,155

$37,898

Recurring

Human Services

Department

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 620 provides for a surcharge on the liquor excise tax. The revenues from the sur-

charge are to be distributed to the Human Services Dept. to provide health coverage to people

who fall below two hundred percent of the federal poverty level. Interstate and military sales are

exempt from the surcharge.

There is no effective date provided.

FISCAL IMPLICATIONS

The total fiscal impact of this bill, as estimated by TRD, is approximately $37 million to the

Human Services Department. TRD notes that fiscal impact estimates are based on the forecast

from the Consensus Forecast Group. It is assumed the additional surcharge will increase liquor

prices and have a negative impact on liquor consumption. The liquor surcharge would add an

average $0.044 per drink to the liquor excise tax, a 95 percent increase. The total tax and sur-

charge average is $0.09 per drink. For fiscal year 2006 an estimated 838,000,000 million drinks

will be sold.

Senate Bill 620 -- Page 2

ADMINISTRATIVE IMPLICATIONS

TRD notes that collecting the new surcharge would require a new return and configuration to add

a new computer program. The estimate that 120 hours will be needed to code, test, and imple-

ment a new program.

OTHER SUBSTANTIVE ISSUES

TRD notes that, with the addition of the surcharges on liquors, New Mexico’s taxes on liquor

would rank as some of the nation’s highest. For beer and liquor we would rank 2nd behind

Alaska, and 3rd for taxes on wine, after Alaska and Florida. They note, however, that it is not

clear, however, that having a higher-than-average liquor tax would be a serious competitive dis-

advantage for New Mexico.

OPJ/yr