Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Gallegos/Serrato/Herndon/Lundstrom/
Johnson
LAST UPDATED
ORIGINAL DATE 01/31/2025
SHORT TITLE Saturday After Thanksgiving GRT Sunset
BILL
NUMBER House Bill 179
ANALYST Faubion
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
GRT ($559.5) ($577.5) ( $589.8) ($602.2) ($615.0) Recurring General Fund
GRT ($372.6) ($384.7) ($392.8) ($401.1) ($409.6) Recurring
Local
Governments
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
TRD
Indeterminate
but minimal
Indeterminate
but minimal
Indeterminate
but minimal
Nonrecurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
2024 Tax Expenditure Report
Agency Analysis was Solicited but Not Received From
Taxation and Revenue Department (TRD) Because of the short timeframe between the introduction of this bill and its first hearing, LFC has
yet to receive analysis from state, education, or judicial agencies. This analysis could be updated
if that analysis is received.
SUMMARY
Synopsis of House Bill 179
House Bill 179 (HB179) extends the sunset for the small business Saturday Thanksgiving
weekend gross receipts tax (GRT) deduction from the end of fiscal year 2025 to the end of fiscal
year 2030. The bill also requires the deduction, including the total annual aggregate cost of the
deduction, be included in the tax expenditure budget.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns, or June 20, 2025, if enacted. House Bill 179 – Page 2
FISCAL IMPLICATIONS
As reported in the 2024 Tax Expenditure Report, this deduction cost the state general fund $542
thousand and local governments $361 thousand in fiscal year 2024. LFC estimates future costs
by growing the FY24 reported costs by S&P Global’s inflation forecast, excluding food and
energy, to account for increasing prices for retail goods.
This bill creates or expands a tax expenditure. Estimating the cost of tax expenditures is difficult.
Confidentiality requirements surrounding certain taxpayer information create uncertainty, and
analysts must frequently interpret third-party data sources. The statutory criteria for a tax
expenditure may be ambiguous, further complicating the initial cost estimate of the fiscal impact.
Once a tax expenditure has been approved, information constraints continue to create challenges
in tracking the real costs (and benefits) of tax expenditures.
There could be minimal costs to the Taxation and Revenue Department to extend this deduction.
This analysis could be updated if that analysis is received.
SIGNIFICANT ISSUES
Receipts from retail sales of specified tangible personal property are deductible from GRT if the
sale occurs during the first Saturday after the Thanksgiving holiday. The deduction may be taken
on sales of property with a value of less than $500. Qualified retailers must be a business in New
Mexico and have employed no more than 10 employees at any one time in the previous fiscal
year.
The deduction is like the back-to-school tax free weekend, which is widely used in New Mexico.
This deduction, however, restricts purchases to those made at small businesses and is believed to
have much lower usage. While the deduction may result in a small increase in purchases at small
businesses during the popular holiday shopping season, the overall benefit is limited. The
number of businesses that claimed the deduction has increased since FY21, which may indicate a
post-pandemic recovery of small businesses.
This bill narrows the GRT. Many New Mexico tax reform efforts over the last few years have
focused on broadening the GRT base and lowering the rates. Narrowing the base leads to
continually rising GRT rates, increasing volatility in the state’s largest general fund revenue
source. Higher rates compound tax pyramiding issues and force consumers and businesses to pay
higher taxes on all other purchases without an exemption, deduction, or credit.
PERFORMANCE IMPLICATIONS
The LFC tax policy of accountability is met with the bill’s requirement to report annually in the
tax expenditure budget the data compiled from the reports from taxpayers taking the deduction.
OTHER SUBSTANT IVE ISSUES
In assessing all tax legislation, LFC staff considers whether the proposal is aligned with
committee-adopted tax policy principles. Those five principles: House Bill 179 – Page 3
Adequacy: Revenue should be adequate to fund needed government services.
Efficiency: Tax base should be as broad as possible and avoid excess reliance on one tax.
Equity: Different taxpayers should be treated fairly.
Simplicity: Collection should be simple and easily understood.
Accountability: Preferences should be easy to monitor and evaluate
In addition, staff reviews whether the bill meets principles specific to tax expenditures. Those
policies and how this bill addresses those issues:
Tax Expenditure Policy Principle Met? Comments
Vetted: The proposed new or expanded tax expenditure was vetted
through interim legislative committees, such as LFC and the Revenue
Stabilization and Tax Policy Committee, to review fiscal, legal, and
general policy parameters.
?
No record of an
interim committee
hearing can be
found.
Targeted: The tax expenditure has a clearly stated purpose, long-term
goals, and measurable annual targets designed to mark progress toward
the goals.
There are no stated
purposes, goals, or
targets.
Clearly stated purpose
Long-term goals
Measurable targets
Transparent: The tax expenditure requires at least annual reporting by
the recipients, the Taxation and Revenue Department, and other relevant
agencies.
The deduction must
be reported publicly
in the TER.
The deduction does
have an expiration
date.
Accountable: The required reporting allows for analysis by members of
the public to determine progress toward annual targets and determination
of effectiveness and efficiency. The tax expenditure is set to expire unless
legislative action is taken to review the tax expenditure and extend the
expiration date.
Public analysis
Expiration date
Effective: The tax expenditure fulfills the stated purpose. If the tax
expenditure is designed to alter behavior – for example, economic
development incentives intended to increase economic growth – there are
indicators the recipients would not have performed the desired actions
“but for” the existence of the tax expenditure.
?
There are no stated
purposes, goals, or
targets with which to
measure
effectiveness or
efficiency.
Fulfills stated purpose
Passes “but for” test
Efficient: The tax expenditure is the most cost-effective way to achieve
the desired results.
?
Key: Met Not Met ? Unclear
JF/hj/SL2/sgs