International Handbook of Land and Property Taxation

International Handbook of Land and Property Taxation

Elgar original reference

Edited by Richard M. Bird and Enid Slack

This comprehensive Handbook explores case studies of land and property taxation in 25 countries (five in each of five regions – OECD, central and eastern Europe, Asia, Africa, and Latin America), and focuses on the potential contributions of the property tax to the revenues of urban and rural governments and to more efficient land use.

Chapter 27: Property Taxes in Mexico

Richard M. Bird

Subjects: economics and finance, public finance, public sector economics

Extract

1 Richard M. Bird Mexico is a federal country, with 31 states and a federal district (Mexico City). It also has 2430 local governments. Since a constitutional reform in 1983, the property tax has been a local tax. At present, the property tax (predial), is the single most important source of own-tax revenue for local governments. The base and rate of this tax are generally set by the state, not by the local government, however.2 There are wide variations from state to state in the importance of this tax. Variations within states are equally great, with many rural areas not even collecting the tax. For Mexico as a whole in 2000, the property tax accounted for 5.6 percent of total revenues and for 58.7 percent of municipal taxes (Chavez-Presa, 2002). Local governments in some states, such as Nuevo León, financed about 25 percent of their expenditure with their own taxes but in other states, such as Chiapas, the figure was 5 percent or less (Giugale and Webb, 2000).3 As a percentage of GDP, property tax collections in 2000 were 0.21 percent, with different states ranging from 0.06 to 0.28 percent, and the federal district reaching a high of 0.44 percent. In 1999, all municipal taxes (excluding the federal district) amounted to only 0.14 percent of GDP and property taxes accounted for 64 percent of this amount (or 0.09 percent of GDP) (MayerSerna, 2001).4 Unfortunately, there is no centralized source of information in Mexico on local finance, so...

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