New Mexico House Bill HB124

New Mexico 2023 Regular Session

• Introduced: 1/19/23
• Report Pass: 1/30/23

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Tobacco Tax Rates & Definitions

Impact

The revisions proposed in HB124 are designed to address both health concerns and economic factors associated with tobacco use in New Mexico. By raising the tax rates and including nicotine from all sources, the bill aims to create a more comprehensive approach to tobacco regulation. This could lead to increased state revenue dedicated to health initiatives and enforcement against illicit tobacco products. However, these changes could also have economic implications for businesses that manufacture and distribute tobacco and related products, as they may face higher operational costs that could affect pricing and availability in the market.

Summary

House Bill 124 introduces significant amendments to the Tobacco Products Tax Act in New Mexico. The bill proposes to increase the excise tax on tobacco products, establishing a new rate of thirty-one percent on the wholesale price of these products. This increase not only applies to traditional tobacco products but also expands the definition of 'tobacco products' to include synthetic nicotine, thereby encompassing a wider array of products, including e-cigarettes and e-liquids. The intention behind these changes is to enhance public health measures by discouraging tobacco consumption through higher taxes, which have been shown to reduce usage rates, particularly among younger demographics.

Contention

While supporters of HB124 argue that increased taxation is a necessary step towards improved public health outcomes and reduced smoking rates, there are notable points of contention surrounding the bill. Critics, particularly from the retail tobacco sector and civil liberties advocates, raise concerns about the potential adverse effects on small businesses. They argue that elevated taxes may drive consumers to the black market for cheaper alternatives, undermining legal businesses. Furthermore, there is discussion about whether the tax implications will disproportionately affect low-income individuals who may be less able to absorb the increased costs of tobacco products and associated substitutes, such as e-cigarettes.