The Property Tax Modernization Dilemma: A Decision-Support Framework for Equity and Revenue Under Cadastral Reform

Juan Carlos Muñoz-Mora, Mónica Almonacid and Laura Peña
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Juan Carlos Muñoz-Mora: Escuela de Finanzas, Economía y Gobierno, Universidad EAFIT
Mónica Almonacid: Antioquia Cómo Vámos
Laura Peña: Universidad EAFIT
Authors registered in the RePEc Author Service: Juan Carlos Muñoz-Mora ()

Documentos de Trabajo de Valor Público from Universidad EAFIT

Abstract: Cadastral modernization — updating assessed property values after decades of stagnation — creates a structural dilemma for local governments: better data generates larger fiscal shocks that can trigger the taxpayer resistance that undoes the reform itself. This paper develops a decision-support framework that resolves this dilemma by optimizing property tax rate schedules to be simultaneously revenue-adequate, equity-preserving, and legally compliant under taxpayer-protection constraints. Applied to 929,703 properties across 88 municipalities in Antioquia, Colombia — where a 2024–2025 update nearly doubled the aggregate tax base — three findings emerge. First, the equity-revenue trade-off is far more favorable than current ordinances imply: the median municipality can increase revenue by 7.6% while reducing the residential tax burden. Second, current rate schedules are structurally obsolete and latently regressive, averaging 50 tariff combinations calibrated to 1990s nominal property values. Third, from a fiscal restructuring perspective, the simpler and cheaper land-value-only catch-up update mechanism (PND catch-up) is associated with comparable or higher fiscal restructuring potential than full cadastral modernization — a finding about rate-design returns, not about the overall value of comprehensive modernization. The framework is replicable by any subnational government with access to digitized property-level cadastral records, retrievable rate ordinances, and administrative tax-liability data of adequate quality.

Keywords: property tax; cadastral modernization; fiscal shock; subnational fiscal capacity; decision-support framework; equity-revenue trade-off; Colombia; linear programming (search for similar items in EconPapers)
JEL-codes: C61 H71 H72 R51 (search for similar items in EconPapers)
Pages: 58
Date: 2026
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