New Mexico's legislative session begins with nearly $900 million in new funds, as indicated by the latest budget analyses. This financial boost adds to previous surpluses, leading to significant investments in the state's sovereign wealth funds, which now amount to $58 billion.
While many states might consider tax cuts or rebates with such a surplus, New Mexico's current political landscape suggests otherwise. The state has elected representatives who are considering increasing taxes instead of reducing them.
A proposed tax increase on alcohol is at the forefront of discussions. Despite past disagreements among progressive legislators and a veto by Governor Lujan Grisham on a small alcohol tax hike in 2023, the issue remains unresolved. Advocates argue that higher alcohol taxes could address related societal problems; however, critics suggest reallocating existing excise tax revenues for treatment programs instead.
Currently, New Mexico ranks 24th nationally for its distilled spirits tax at $6.06 per gallon, 14th for beer at 41 cents per gallon, and 5th for wine at $1.51 per gallon according to the Tax Foundation. These figures challenge claims that state alcohol taxes are low.
Despite being ranked 31st in per-capita alcohol consumption nationally, some lawmakers believe addressing issues through broader taxation may not be effective. Critics argue that imposing taxes across all residents may not solve problems caused by a minority of heavy drinkers and view such measures as regressive.
The Rio Grande Foundation's Paul Gessing questions whether increased taxes would influence high-income individuals' drinking habits and points out an inconsistency in policy approaches regarding legal substances like marijuana versus alcohol.
Gessing asserts: "Taxes are a blunt tool in addressing consumption of a legal product." He further critiques what he perceives as "neo-prohibition" tendencies among progressive politicians advocating for higher alcohol taxes while simultaneously supporting marijuana legalization initiatives.
The Rio Grande Foundation continues to promote limited government and economic freedom within New Mexico under Gessing’s leadership.
