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It is one of the oldest tools of public management. It seeks to guarantee electricity, water or public order services. And in Mexico it is known as a "fiscal anomaly."
This is the crucial and universal property tax, a levy that the government charges the owners of land, an apartment or a premises to finance local services.
Mexicans pay an almost symbolic amount: their total collection is equivalent to 0.2% of the Gross Domestic Product (GDP), according to official figures, when the average for the region is 0.8%.
The cadastral value of a property in Mexico is usually equivalent to between 30 and 40% of the commercial value, according to specialized studies.
But property taxes are not the only example that Mexicans pay less taxes than their Latin American peers: the Value Added Tax (VAT), for example, is 16%, two points less than the regional average.
In addition, about 70 border municipalities pay half of that to protect their competitiveness against their neighbors to the north, the United States, and to the south, Guatemala.
There are even basic products—such as water, agricultural inputs, and some medicines and foods—that do not pay VAT; which, in accounting jargon, have a "0% rate".
Mexico's fiscal anomalies have many complex causes and consequences, but there is one fact that allows them to be summarized: with a collection of 15% of GDP in 2025, this is the country that collects the least taxes of the members of the Organization for Economic Cooperation and Development (OECD), whose average is 34%.
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In the region, with an average of 21%, only countries like Paraguay and Peru collect so little. Argentina, Brazil, Colombia or Chile are far above.
Despite this, one of the pillars of the popularity of the Mexican president, Claudia Sheinbaum, is the growing consolidation of a welfare state based on social assistance and universal pensions.
In these days, the president proposed harmonizing the cadastres to increase revenue. The opposition called it a "covert predialogue."
Sheinbaum, however, maintains his promise, inherited from Andrés Manuel López Obrador (AMLO), not to raise or create taxes.
Why does Mexico, in general, collect so little, and why can this only now become a problem?
A "vicious circle"
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For the experts consulted, it is not that Mexicans pay little, but that informality, evasion, exemptions and lack of trust translate into low collections.
"Workers don't pay little taxes," says Vanessa Romero Rocha, a lawyer and analyst. "The problem is that we do not all contribute in the same way; we tax workers more easily than wealth; it is easier to tax someone who is captive on the payroll than someone who has their assets in properties and investments."
Mariana Campos, director of México Evalúa (ME), a think tank, adds: "We have a vicious circle that promotes evasion: informality, precarious services, corruption and crime are perceived as the absence of the State and that has greatly damaged trust and makes collection difficult."
"Without trust, and if you add crime and informality, the two great cancers of Latin America, taxation is truly difficult," he says.
Informality, evasion and condonations
Although workers without contracts pay taxes through VAT, just over half of the Mexican economy, according to the ME itself, is informal, and that drastically reduces the ability to collect through income and salaries.
An average of 60% of Latin Americans use electronic means as a form of payment. That formalizes and allows taxes to be collected. In Mexico that figure is 40%, according to ME.
Large companies, in fact, bear a good part of the tax burden: their taxes generate 3.9% of GDP, the same as the OECD average of 3.8%, despite the fact that Mexico has a high corporate rate compared to its trading partners, explains Campos.
The problem, he says, is that "we have many small companies" that pay little or nothing and for individuals, where income tax represents 3.7% of GDP compared to 8.2% in the OECD.
Most of the revenue comes from companies and their employees. The gap, rather, has historically been in evasion and exemptions.
For years, the sale and purchase of false invoices by shell companies, for example, made it possible to simulate expenses in order to deduct the payroll tax rate or the payment of VAT. Many also registered their minimum wage workers in search of paying less social security.
The AMLO and Sheinbaum governments focused their tax policy on this: modernizing systems, promoting invoices, collecting forgiveness and resolving large debts.
For example, Ricardo Salinas Pliego's conglomerate, one of the most powerful in the country, had to liquidate nearly US$1.8 billion that were in dispute with the State for tax credits. He considers it "unfair and extortionate" and says he will go to international courts.
With the systematizations and forgiveness, tax collection went from representing 13% of GDP in 2018 to 15% in 2025, a considerable figure that, however, according to experts is not enough to pay the State's obligations.
Although public spending—27% of GDP—is not higher than the region's average and is even 10 points lower than the OECD average, it is a key driver of the internal market and the main containment of poverty in the face of high informality.
Sheinbaum's government - and previously that of AMLO - promotes a welfare state that seeks to transform social support into constitutional rights, such as pensions for older adults, student scholarships and free medical care.
But they promote it under the promise of not increasing taxes or removing subsidies such as gasoline, which seeks to avoid price jumps.
The end of the "goose that laid the golden eggs"
The sale of oil, the main source of resources for the Mexican State for decades, recently underwent a strategic, technical and financial transformation that, although it reduced vulnerability to a good whose price fluctuates, compromised the State's finances.
Before 2019, Pemex paid up to 65% of its income in taxes. Today that figure is less than 30%, with much lower production and with the oil company in crisis and in debt.
The so-called "goose that lays the golden eggs" of the Mexican State became sterile.
Oil revenues went from 3.8% of GDP in 2019 to 2.7% in 2025, which puts Mexico in the unprecedented situation of needing new sources of financing.
"Oil resources were a reason for not making different fiscal efforts, and now that they wanted to lower the fiscal burden on Pemex so that it operates better and public finances do not depend on it, Pemex was not able to function better but public finances were complicated," says Valeria Moy, an economist.
For the director of the Mexican Institute for Competitiveness, a research center, the Mexican economy is then facing a "serious situation in the midst of tax relaxation that is the product of political decisions."
The sensitivity of this unprecedented situation
Although there have been no macroeconomic shocks and in the last quarter the economy grew slightly, Mexico has not grown above 2% per year for 5 years, a trend that, for Moy, can continue if there are no changes in the production and energy model.
The timid growth makes it difficult to increase collection if it is not with a structural tax reform that, for example, homogenizes VAT, penalizes informality, taxes assets or unlinks social security from employment.
"Historically there has been little willingness on the part of politics and the electorate to carry out a fundamental fiscal reform, but if the State collects little, it can only offer poor services," says Romero. "It's ridiculous to think that first it's going to start providing you with good services and then ask you for more taxes."
The president's plan, at least for now, does not include increasing or creating tax rates, according to the 2027 budget about to be approved in Congress: Sheinbaum hopes to finance the expense with the same strategy of collecting forgiveness and systematizing collection processes.
Its incipient Plan México to promote national industries and increases in the minimum wage can also generate new and stable sources of income.
And it is also expected that the expense will be covered with internal and external debt, which already represents 55% of GDP.
Mexico, at this moment, is not in an emergency: the economy is not decreasing, the debt is lower than in other similar countries and the currency has remained stable despite external ups and downs.
But if fiscal tension continues, experts fear that the country will lose its investment grade according to international credit agencies.
"That would not only generate a strong devaluation and inflation and a worse fall in investment and growth, but it would also lead to a breakdown in public finances that would be very difficult to resolve," says Moy.
While the details of the so-called "predialazo" continue to be discussed - for example, whether its collection remains in the municipalities or if it is structured by a state digitalization agency - Mexicans are called to elections for governors and deputies next year that reduce the margin of the president, who maintains an approval of between 65 and 70%.
The Mexican State managed to navigate the reduced revenue for years thanks to oil revenue, but now—with less oil, international uncertainty and slight growth—it faces an unprecedented situation.
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