City Finance Director Marty Garcia calculates the impact of the recent rise in the gross receipts tax. (Sun photo: William Thompson)
Tucumcari’s Finance Director, Marty Garcia, said the gross receipts tax has been raised from 6.81 percent to 7.5 percent, effective Jan. 1.
“The state did away with the .5 percent tax credit raising the state tax from 4.5 percent to 5 percent,” Garcia said. “In addition, the county tax increased from .5 percent to .687 percent. The city tax remains at 1.8125 percent.”
Garcia said the state will now collect 7.5 percent of every dollar spent in Tucumcari.
Garcia explained the gross receipts tax increase’s impact on consumers.
“It amounts to less than a penny on the dollar,” Garcia said. “The state had to come up with some way to help offset the loss of revenues from the recently repealed food tax.”
Garcia said the gross receipts tax is a tax on vendors who typically pass that tax onto consumers.
“The gross receipts tax is basically extra that you have to pay for tangible items and services,” he said. “It is designed to help fund state and local government. Certain unprepared food items at certified food retailers are exempt from the gross receipts tax.
“I think the state is going to generate more money from the increase in gross receipts taxes than the city would have generated had the food tax not been repealed,” he said. “The state should generate about $430,000 from the increase in the gross receipts tax. Even with the increase in the gross receipts tax, low income individuals will still benefit because the food tax was repealed.”