Two tax proposals that would have had negative consequences for insurers and policyholders were averted last week as the New Mexico legislature wrapped up its 2010 regular session, according to the Property Casualty Insurers Association of America (PCI).
Facing a $650 million budget deficit, lawmakers were evaluating a variety of tax proposals to make up the shortfall this session.
Senate Bill 29 would have provided a means for enhancing state revenue by amending the Insurance Code to abolish the gross receipts tax exemption on third-party administrative contracts. Insurance and business interests worked together to provide information about the bill’s negative consequences and potential for creating an anti-business climate, and the bill was tabled.
House Bill 99, the Emergency Services Insurance Premium Surtax, would have required that in addition to the insurance premium tax, property and auto insurers would have been responsible for paying a surtax on all premiums and policy fees. A version of the bill was passed out of committee but was defeated in the House.
“In discussions with lawmakers on HB 99, the industry effectively made its case that enactment of this surtax would have made New Mexico’s premium tax one of the highest in the United States,” said Kelly Campbell, PCI vice president. “The bill would have made it extremely difficult for domestic insurers to operate effectively and serve policyholders in New Mexico and would have forced companies to pass on added costs to policyholders.”
After failing to fix the budget deficit, the New Mexico legislature is likely to convene a special session in the coming weeks.