Deming Democratic Sen. John Arthur Smith often compares New Mexico's gross-receipts tax to Swiss cheese.

He is referring to all the tax breaks -- exemptions, deductions and credits -- that make the statewide levy as holey as, well, Swiss cheese.

In the decades since New Mexico's gross-receipts tax was created, the average rate statewide has risen to more than 7 cents on every dollar, up from 4 cents. The rate is currently just more than 8 cents in Santa Fe. The increase is, in part, due to all the tax breaks added over time that siphon away revenue, putting upward pressure on the tax rate, Smith says. Take enough revenue out of a broad-based tax, and the only way to raise the same amount of money is to raise the rate, he says.

Another way to think of the tax is as a boat, which is full of holes. The more holes, the faster the boat sinks. Plug the holes, and the boat stabilizes.

Now, many lawmakers and Gov. Susana Martinez are asking for more tax breaks in the gross-receipts tax during the 30-day legislative session. And all Smith can see is more holes in the Swiss cheese.

So, he said, enough is enough. He sponsored Senate Bill 229. The legislation would eliminate the gross-receipts tax altogether, and get the state to the same result as the Legislature's slow-motion nibbling away at the tax base, just a lot quicker, he says.

"Give me credit for the largest tax cut in New Mexico history," Smith said, smiling.

Smith knows his legislation has no chance of passing, although it did clear the Senate Corporations and Transportation Committee on Monday. If the legislation becomes law, the state's projected $5.6 billion state budget would be short by a billion or two. Eliminating the state tax also would call into question the state's legal responsibilities to people who have bought state bonds, which are backed by the state gross-receipts tax.

Smith, who chairs the Senate Finance Committee, says he wants to send a message with this bill. The Legislature and the governor must embrace a serious discussion on reforming the state's gross-receipts tax: Eliminate enough credits, exemptions and deductions, increasing the flow of revenue, and policymakers could lower the overall tax rate.

He's got some support.

"It's a great message," Sen. Stephen Fischmann, D-Mesilla Park, said.

Martinez said Tuesday that she was aware of Smith's bill. "We visited about it yesterday," the governor said. But she didn't sound enthusiastic.

"It would be a $1.6 billion hit to the general fund," Martinez said, naming the No. 1 reason to oppose it.

She knows Smith, whom she said she respects, wants to "have a comprehensive look at all tax reform and all tax credits." But she's not sure the Legislature is ready. To make her point, Martinez referred to a blue-ribbon task force impaneled in 2003 to study tax reform. The group came out with several proposals and recommendations.

"They did a study of all the tax code, but didn't implement any of those proposals," Martinez said. "How many times do we study something when we are not ready to implement it?"

Contact Trip Jennings at 986-3050 or at tjennings@sfnewmexican.com.