Senate approves aviation sales tax removal bill

February 19, 2014 • Local News

A bill to cut sales tax on commercial and military aircraft sales and services that promises to create some 125 jobs in Chaves County passed the New Mexico Senate Wednesday.

The bill, ushered through the Legislature by state Rep. Bob Wooley, R-Dist. 66, narrowly made it under the wire in the 30-day session. Gov. Susana Martinez is expected to sign the measure that will take effect July 1.

“This morning, they announced there was going to be eight bills heard. Mine was the eighth one,” Wooley said. “I got very fortunate.”

Wooley said he was elated with the Senate’s move to pass the measure.

“This is going to mean a lot of jobs for the city of Roswell out at the air base,” Wooley said. “This is probably one of the biggest things to boost [auth] our economy there for a long time.”

Companies operating out of the Roswell Air Center now pay a 7 percent gross receipts tax on the sale of commercial and military aircraft. They also pay the tax on any maintenance, refurbishing, remodeling or other work done on planes.

Chaves County-Roswell Economic Development Corporation Executive Director John Mulcahy conducted an economic impact study of the bill prior to its presentation to the Legislature.

The study showed that in five years, 125 jobs would be created, he said. Those, in turn, would generate $5.25 million in payroll.

“We had indirect impacts and induced impacts that would increase the economy at $10.5 million,” Mulcahy said last week. “So, it’s pretty important that we get those.”

AerSale and Stewart Industries are two companies that operate from the air center. Both are expected to now be able to benefit from the tax break by hiring additional workers and handling more aircraft.

Mayor Del Jurney said the idea first started in October with a conversation he and others had with one of the aircraft businesses at the air center about actions that could be taken legislatively to create more opportunities, Jurney said.

“We got our delegation together to talk about it and took it from there,” Jurney said. “When we sat down back in October with our legislators and talked about this, there was a lot of skepticism about whether we could do this in the 30-day session. It was a lot of hard work and (they) made it happen.”

Jurney said he was excited about what the tax break would create, including creating additional interest in the region from outside companies.

“This is huge and it’s really a significant step,” Jurney said.

The Taxation and Revenue Department reported that there would be a minimal loss of any current tax revenue as a result of the passage of the measure, according to its fiscal impact report.

Industry representatives supported the department’s analysis, reporting that though airplanes are maintained and repaired in-state, they are flown outside of New Mexico for sale, to avoid paying the state’s gross receipts tax, according to the report.

The deduction would permit the sale to occur in-state. This could provide an incentive for additional investment in airplane maintenance and repair in New Mexico, to the economic benefit of the state, the department reported.

The bill does not have a sunset date.

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