Purposes of Taxation and Revenue Department FIRs

FIRs typically describelegal, administrative, and technical issues associated with proposed legislation, as well as probable associated fiscal impacts, i.e., changes in revenues – not expenditures. Fiscal impact reports therefore serve a number of purposes. They are designed to assist policy makers in making sound decisions by describing probable effects of proposals. The most important function of FIRs, however, probably consists of generating estimates of revenue and therefore facilitating budget development. Perhaps the second most important function of fiscal impact report is to let legislators know whether proposed measures would be difficult to administer. A similar purpose consists of informing decision makers if it appears that a particular proposal contains technical problems. These can range from conflicts with the New Mexico Constitution or other statutes to language in a measure that would make its administration extremely difficult because its provisions are unclear. FIR’s also often address tax policy issues raised by a bill – i.e., what particular group of individuals would be affected by it, whether the measure is likely to be viewed as fair by various groups, and whether the measure is likely to affect decisions made by people that it affects. The policy issue discussions are based on criteria of good tax policy contained in public finance textbooks.