Oct. 1, 2003

Laboratory should pay the gross receipts tax

Much in the local news lately, and even in the Daily Newsbulletin, is the issue of the Laboratory payment of the New Mexico gross receipts tax. The Lab has been exempt from the tax, on the basis of University of California's non-profit status. This exemption costs New Mexico about $70 million per year in lost revenue. Sandia National Laboratories pays the tax. I believe that the Lab should pay the tax, because it is in exactly the same business (nuclear weapons) as Sandia.

Lab leadership continues to oppose this tax, treating the issue as a "zero sum" game, where the Lab would not be reimbursed by the Department of Energy for the tax. This assumption seems, on the face of it, unreasonable. If DOE can pay the tax at Sandia, surely they can pay it for the Lab. The current situation is nothing less than a $70 million subsidy of the federal government by New Mexico, one of the poorest states in the country.

Removing UC from the Lab, and awarding the contract to Lockheed Martin (Sandia's operator), would result in the tax being paid. Is that the only way to collect it? I hope that the Lab's public position becomes more balanced on this issue. Certainly, with Senator Domenici in such a powerful position (head of the Energy and Natural Resource Committee) the first, and likely, result of paying the tax would be simply to have the Lab budget increased to pay it. Only if that fails, and I don't expect this, would the Lab have to find the money within its current budget. The New Mexico Legislature understands this, and they do not find the Lab's attempts to avoid the tax credible or useful.

There is no reason to treat this issue as a "zero sum" game. I believe that the Lab should be a good citizen of this state and pay its taxes, including the gross receipts tax, cheerfully. The state needs the money, and this unwarranted subsidy should end.

--Chris Mechels