The Performance of the Property Tax in Mexico: Asymmetric Assignment of Cadastral Management and The Role of Local Capacity

Alejandro Beltran and Jorge Martinez-Vazquez
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Alejandro Beltran: Universidad del Pacifico, Peru
Jorge Martinez-Vazquez: International Center for Public Policy, Georgia State University Author-Name: Andres Munoz

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The property tax in Mexico is far from reaching its potential. It has grown little over the past 25 years due to both policy and administrative shortcomings. A major issue lies in the weak management of cadastres--the systems used to identify, register, and value properties--which are often outdated or poorly maintained because of lack of interest and capacity, and inconsistent federal and state support. The effectiveness of property tax collection hinges on a strong cadastral administration, which is complex, costly and often unpopular among citizens, especially in developing countries. The debate over whether cadastral functions should be centralized or decentralized centers on a trade-off between capacity (favoring centralization) and incentives for revenue collection (favoring decentralization). Using municipal-level data from 2016 to 2022, this study analyzes how different governance structures regarding cadastral administration affect property tax revenues in Mexico, with particular focus on the role of local capacity in shaping outcomes. It finds that municipalities with low administrative capacity benefit from state-managed cadastres, while those with high capacity perform better when managing their own. These findings support an asymmetric approach to cadastral management, tailored to local capacities, to enhance revenue collection.

Pages: 27 pages
Date: 2025-05
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