During the last years, the property tax has framed a recurring discussion in the context of the analysis and evaluation of local public finances.
In general terms, there is some unanimity in affirming that the inefficiency in the collection of said contribution is caused by the lack of political will, methodological issues, poor infrastructure and the institutional incapacity of local governments. For this reason, various technical forums have raised the need to rethink its structure.
According to information published by the Ethos Public Policy Laboratory, in 2019, property tax collection in Mexico represented only 0.3% of GDP, which places our country at the lowest level of all OECD members. We are even below the average for Latin America and the Caribbean (0.8%), where nations with similar economies, such as Argentina and Brazil, exceed the average of 2%.
Since the foundation of Tenochtitlan, the property tax has been present in the history of our country, and it was not until the post-revolutionary era that the tax was formalized and became more relevant. Since the creation of the “one to a thousand tax”, at the initiative of President Álvaro Obregón, in 1922, the collection of the property tax depended on the states in a centralized collection scheme.
Later, in 1982, article 115 of the Constitution was reformed, in order to grant for the first time to the municipalities the power to collect said contribution.
Currently, the model used for the collection of property taxes works in a decentralized manner: the municipalities are in charge of its collection.
Only in the case of Mexico City —due to the precedent of its legal nature— the centralized collection scheme was maintained for collection purposes, which has resulted in a significant improvement in the administration and collection of the tax.
In this context, it is relevant to note that Quintana Roo, Querétaro and Mexico City were the entities that collected the most property taxes as a percentage of their GDP in 2020, with 0.72%, 0.64% and 0.61%, respectively. In contrast, Campeche and Tabasco were the states that collected less property, with 0.04% and 0.06%, respectively. In this sense, and within the framework of the existing evidence regarding the multiple disparities in its collection, during the last years it has been determined that the predial has been badly used and the centralization of its model could mean a significant improvement for the states. and municipalities.
Since 2016, an initiative has been channeled in Congress to issue the General Law to Harmonize and Standardize Public Real Estate and Corporate Registries and Cadastres. Such an instrument —if approved— will have to be added to the efforts undertaken to strengthen the institutional capacities of the municipalities, for the benefit of strengthening their public finances.
BY EMILIO SUAR LICONA
PROFESSOR AT THE PAN AMERICAN UNIVERSITY
From tweeters to deputies (part I)
The last one and we leave
Transform from the Constitution