Restauranteur George Gundrey said a proposal to slightly lower the New Mexico's gross receipts tax (GRT) amounts to mere crumbs, not a healthy portion for business owners.
On Nov. 17, Gov. Michelle Lujan Grisham announced her pursuit of a .25% reduction in the state's gross receipts tax rate, which would lower the statewide rate to 4.875%.
Gundrey, who owns and manages Atrisco Café & Bar in Santa Fe and Tomasita’s in Santa Fe and Albuquerque, said the proposal is virtually meaningless.
“Effective toward what? I don’t even understand what the goal is,” he said. “For a business owner, it does absolutely nothing.”
Should the legislation make it through the 2022 New Mexico legislative session, it would be the body's first cut of this kind in 40 years. Gundrey, 53, who has been in the restaurant business almost his entire life, said it’s far too little to have a real impact.
In a news release announcing her intent to pursue the reduction, Lujan Grisham said, “Cutting gross receipts taxes for the first time in decades will put more money in the pockets of New Mexico families and businesses. We have the tools to continue building long-lasting economic success. We just have to be bold enough to use them.”
Gundrey is unimpressed.
“I think that the tiny reduction in GRT is not going to do anything for me or for the average person,” he told New Mexico Sun. “If they were to reduce it the same amount each year for several years, that would save us some money. Even for me as a restaurant owner, the GRT on services like graphic design hurts me more by driving up prices and creating unwanted bureaucratic work for me. The legislature should definitely eliminate this completely or at least for several types of work.
“I need to have my three restaurants set up as separate legal entities for liability and other reasons," he added. "Yet the separate entities cannot charge each other for services because I would need to pay sales tax on it. I have to do a bunch of creative work-arounds. The GRT on service is something that directly hurts my business. I am sure the tax code needs to be massively simplified, that's more an issue for economists and others looking at diverse businesses.”
According to Taxation and Revenue Secretary Stephanie Schardin Clarke, a new source of gross receipts tax revenue provided the opportunity to reduce the rate.
“New Mexico recently expanded its gross receipts tax to include internet sales. That new revenue source paves the way to lower the gross receipts tax rate for the prosperity of all New Mexicans,” Clarke said in the press release.
Gundrey said other issues deserve scrutiny.
“I think my other important problems are a general anti-business attitude of our elected leaders and a very poor service provided to business owners when we are forced to interface with the government,” he said. “Two good examples are the unemployment system is a nightmare for businesses. The online system for dealing with claims is not user-friendly and takes an insane amount of time.
“We are always held liable and have our rates go up no matter what the former employee does to get fired," he added. "For example, I fired a guy who was sexually harassing people and to deal with stopping him from getting unemployment would have taken hours or my time. I just gave up. During COVID-19 we were told that we would not get penalized for letting people go due to the lockdowns, but we were, and had to appeal to get it corrected. Hours of work and a lot of stress over thousands of dollars of potential additional cost.”
The new sick leave law will harm small businesses, Gundrey said. It will take effect July 1.
“Business owners are guilty until proven innocent," he said. "We have to pay people for not coming to work because they drank too much the night before. We have to hire additional staff or service providers to deal with the administration. This is going to cost me multitudes more than what I might save from the GRT reduction. And it was really frustrating that they jammed it through during COVID-19 when we could not lobby effectively."
Gundrey, who served as the executive director of the Santa Fe Farmers Market from 2006-08, said he has firsthand experience dealing with elected and appointed officials.