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One of the oldest tools in public management. Its purpose is to guarantee electricity, water or public order services. But in Mexico, it is known as a "fiscal anomaly."
We are talking about the basic and universal property tax, levied by the government on owners of land, apartments or other properties, to finance local services. The famous IPTU.
Mexicans pay an almost symbolic amount of property tax. Its revenue is equivalent to 0.2% of the country's Gross Domestic Product (GDP), according to official figures. The Latin American average is 0.8%.
Specialized studies indicate that the market value of a property in Mexico is usually equivalent to 30-40% of its market value. The market value is the estimated price that the public authorities attribute to a good.
But property taxes are not the only example that demonstrates that Mexicans pay less taxes than their Latin American peers. Value Added Tax (VAT), for example, is 16%, two percentage points below the continent's average.
Furthermore, around 70 municipalities located on the country's borders pay half this rate, to protect their competitiveness against two neighboring nations — the United States, to the north, and Guatemala, to the south.
There are also basic products that do not pay VAT, such as water, agricultural inputs and some medicines and food. In tax jargon, they have a "0% rate."
The Brazilian VAT is in the implementation phase, unifying five taxes (PIS, Cofins, ICMS, ISS and IPI). Estimates point to a rate close to 28%.
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Mexico's fiscal anomalies have several complex causes and consequences. But there is a fact that allows us to summarize them.
With a collection of 15% of GDP in 2025, Mexico is the country that charges the least taxes among the members of the Organization for Economic Cooperation and Development (OECD), with an average of 34%.
In Latin America, the average is 21% and only countries like Paraguay and Peru collect such a low percentage of GDP as Mexico. Brazil, Argentina, Colombia and Chile are well above this index.
Still, one of the pillars of Mexican President Claudia Sheinbaum's popularity is the increasing consolidation of a welfare state, based on social assistance and universal pensions.
Recently, Sheinbaum proposed creating a more integrated national property information system to increase revenue. The opposition dubbed the proposal a “disguised building”.
But the president keeps her promise, inherited from her predecessor, Andrés Manuel López Obrador (AMLO, 2018-2024), not to raise or create taxes.
But why does Mexico, in general, collect so little? And why can this only now become a problem?
'Vicious circle'
Experts consulted by BBC News Mundo (the BBC's Spanish service) indicate that the issue is not that Mexicans pay little, but that informality, tax evasion, exemptions and a lack of trust result in low revenue.
"Workers don't pay too few taxes", according to lawyer and analyst Vanessa Romero Rocha. “The problem is that not all of us contribute equally.”
"We charge from workers in a simpler way than from wealth. It's easier to charge taxes from someone on the payroll than from someone who keeps their assets in properties and investments."
Mariana Campos, director of the Mexico Avalia (ME, Spanish acronym) study center, highlights that "we have a vicious circle that promotes evasion."
For her, "informality, precarious services, corruption and crime are perceived as an absence of the State, which has greatly damaged trust and makes fundraising difficult."
"Without trust, if we add crime and informality, the two big cancers in Latin America, it really becomes difficult to tax."
Informality, tax evasion and debt remission
Workers without a contract pay taxes through VAT. But just over half of the Mexican economy is informal, according to the ME itself, which drastically reduces the capacity to collect revenue through income and salaries.
On average, 60% of Latin Americans use electronic means as a form of payment, which formalizes and allows taxes to be collected. In Mexico, this rate is 40%, according to the ME.
In fact, large companies bear a large part of the tax burden. Your taxes generate 3.9% of GDP.
This rate is similar to the OECD average of 3.8%, although Mexico has a high corporate rate compared to its trading partners, explains Campos.
The problem, according to her, is that "we have a lot of small companies" that pay little or nothing and, among individuals, income tax represents 3.7% of GDP, compared to 8.2% in the OECD.
The majority of tax revenue in Mexico comes from companies and their employees. The hole, historically, is in tax evasion and exemptions.
For years, the purchase and sale of false invoices by shell companies, for example, made it possible to simulate expenses to reduce the incidence of payroll taxes or VAT payments. Many also registered their employees on minimum wage, to reduce the amount paid into social security.
The AMLO and Sheinbaum governments focused their tax policy on this point: modernizing systems, promoting invoices, collecting remissions and resolving large debts.
Businessman Ricardo Salinas Pliego's conglomerate, one of the most powerful in the country, for example, had to settle around US$1.8 billion (R$10 billion) that was in dispute with the State for tax credits. He considers the amount "unfair and extortionate" and states that he will appeal to international bodies.
With the systematizations and remissions, Mexican tax revenue went from 13% of GDP in 2018 to 15% in 2025. It is a considerable increase, but, for experts, it is not enough to pay the State's obligations.
Mexico's public spending (27% of GDP) is no higher than the region's average and is up to 10 points lower than the OECD average. But they are a fundamental engine for the internal market and the main containment of poverty, given the high level of informality in the country.
Sheinbaum's government (and AMLO's before her) promotes a welfare state, which seeks to transform social support into constitutional rights, such as retirement for the elderly, scholarships for students and free medical care.
But these measures are taken with the promise not to increase taxes or remove subsidies, such as gasoline, to avoid price increases.
The end of the 'goose that lays the golden eggs'
The sale of oil has been the Mexican State's main source of resources for decades.
But this activity recently underwent a strategic, technical and financial transformation that reduced its vulnerability to a product subject to price fluctuations, but compromised the State's finances.
Until 2010, the state company Petróleos Mexicanos (Pemex) paid up to 65% of its revenue in taxes. Currently, this rate is less than 30%, with much lower production and the company in crisis and in debt.
As a result, the so-called "goose that lays the golden eggs" of the Mexican State became sterile.
The income generated by oil went from 3.8% of GDP in 2019 to 2.7% in 2025, putting Mexico in the unprecedented situation of needing new sources of financing.
"Oil resources were a reason not to create specific fiscal efforts," according to economist Valeria Moy, director of the Mexican Institute for Competitiveness, a local think tank.
"After it was decided to reduce Pemex's tax burden, to improve its operation and so that public finances do not depend on this revenue, it was not possible to improve the company's operation and public finances were damaged."
For Moy, the Mexican economy faces a "serious situation, amid tax relaxation that is the result of political decisions."
The sensitivity of an unprecedented sensation
There have been no recent macroeconomic shocks in Mexico.
In the last quarter, the Mexican economy showed slight growth, but for five years, the country has not grown by more than 2% per year.
This trend, according to Moy, could continue if there are no changes in the production and energy model.
Mexico's timid growth makes it difficult to increase revenue, without a structural tax reform that, for example, makes VAT equal, penalizes informality, taxes assets or separates social security from employment.
"Historically, there has been little political and electorate willingness to develop a fundamental tax reform", according to Romer. "But if the State collects little, it will only be able to offer deficient services."
"It's ridiculous to think that you will first start providing good services and then ask for more taxes."
The president's plan, at least for now, does not include the increase or creation of taxes, according to the 2027 budget that is about to be approved by the Mexican Congress. Sheinbaum hopes to finance expenses with the same strategy of collecting remissions and systematizing collection processes.
Its nascent Plan Mexico, to encourage domestic industries, and minimum wage increases could still generate new stable sources of revenue.
It is also expected that expenses will be covered with internal and external debt, which already represents around 55% of GDP.
Mexico, at the moment, is not experiencing an emergency situation. The economy is not in decline, its debt is lower than that of similar countries and the currency remains stable, despite external setbacks.
But, if fiscal tension continues, experts consulted by the BBC fear that the country will lose its investment grade granted by international credit agencies.
"This would not only generate a strong devaluation of the currency and inflation, in addition to a greater drop in investments and growth, but also a disruption of public finances whose resolution would be very difficult", warns Moy.
The details of the so-called predialazo continue to be discussed — for example, whether the collection will be handled by the municipalities or whether it will be structured by a state digitalization agency.
At the same time, there will be elections for governors and deputies next year. The election reduces the president's room for maneuver, who maintains approval levels of 65% to 70%.
The Mexican State managed to manage its reduced revenue for years, thanks to oil money. But now, with less oil revenue, international uncertainties and low domestic growth, the country faces an unprecedented situation.
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