Lack of collection also impacts social mobility
The low collection of property taxes in Mexico not only limits the capacity of local resources, but also represents a lost opportunity for regional development and the ability of people to improve their living conditions.
According to BBVA, Mexico is at the head of other Latin American countries in multidimensional poverty that is, not only there is monetary poverty, but also lack in access to health, education and services.
As for social mobility, the change in the socioeconomic status of people, is notoriously disparate by regions. In the south-southeast, only 14% exceed poverty, while in the north almost 40.6% succeed.
Rodolfo de la Torre, director of Social Mobility of CEEY, explains that an obstacle in Mexico is the public policy on the distribution of resources. The funds that are distributed among the federal entities do not distribute so that social gaps closes.
The property tax can be a good alternative to meet local needs, promote regional development and social mobility, but requires great changes to improve its control and use.
Tax reform and a new collection system
For the property tax to be an effective fund, it is necessary to make several changes. First, it requires a reform that allows the maintenance of cadastral records and timely charge.
De la Torre explained that a legal reform is required that allows municipalities to give their powers of organization, lifting and maintenance of the cadastre to state governments, since it has more resources to be able to do it.
“At this time, the entire property tax system is in the hands of the municipalities, which do not have the means to manage it properly.”
State governments and the Federation can establish collection agreements. De la Torre mentions that it can be done through the Federal Electricity Commission (CFE), which issues receipts to most constructions in Mexico.
The economist suggested the creation of a Regional Economic and Social Infrastructure Fund for lagged areas, which promotes the reduction of regional disparities and fosters equal opportunities.
“The role of the fund would be to take care of greater effectiveness in fiscal collection and that resources are destined to reduce regional disparities,” he explained.
As for the cadastre, both CEEY and Tamón Takahashi coincide with the need to maintain an updated and centralized system that properly and proportionally manages market values.
“What should be done is to update the cadastre, improve the evaluation of the properties and update the rates so that those who have more wealth pay more,” said De la Torre.
