New Mexico Food Tax

New Mexico Voices for Children completed an HIA of a proposed tax on food in the state. In 2004, the New Mexico Legislature exempted food from the gross receipts tax, the state’s version of the sales tax. However, state legislators, under pressure from local governments facing declining revenue, are considering allowing localities to reinstate a tax on food.

New Mexico has the nation’s highest child poverty and long-term unemployment rates, and more than 1 in 4 (28 percent) children in the state don’t have access to enough food. The HIA reported that 42 percent of working families in the state are low-income; these families already spend 25 percent of their income on food (compared with just 3 percent for families in the highest-income group).

In light of these facts, the HIA found that a tax on food could disproportionately affect low-income and minority communities and could cause them to change their spending habits, either spending more on food and less on other needs or maintaining their food budgets and opting for less or lower-quality food. These changes, in turn, could have an adverse impact on food security, nutrition, diet-related health concerns (including obesity and diabetes), and economic security. The HIA also explored potential trade-offs from changes in the price of food, including  possible benefits from increased local revenue, which could be used for services important to health.

Based on these findings, the HIA presented policy and legislative recommendations to reduce health and well-being challenges, improve health through possible changes to the state’s tax code, and mitigate the harmful effects of the proposed food tax.