Fiscal Transfers a Curse or Blessing? Evidence of Their Effect on Tax Effort for Municipalities in Sinaloa, Mexico

Gustavo Canavire-Bacarreza and Nicolas Guadalupe Zuniga Espinoza
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Nicolas Guadalupe Zuniga Espinoza: Universidad Autonoma de Sinaloa

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: This article studies the impact of vertical fiscal transfers on local tax effort in Mexico, considering evidence for municipalities in Sinaloa between 1993 and 2008. Based on cadastral information, gross added value and property taxes we create a “pure” indicator of fiscal effort which is used to analyze the effect of conditional and unconditional transfers on this indicator. We employ econometric techniques such as panel data and the Arellano Bond method to correct endogeneity. The results show that conditional transfers, which began in 1998, have generated laziness towards property tax collection, negatively affecting the fiscal effort, even after controlling for demographic factors, population and the index of exclusion.

Keywords: transfers; fiscal equality; tax effort; property taxes; Mexico; Sinaloa. (search for similar items in EconPapers)
Pages: 30 pages
Date: 2010-10-01
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper1030

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