Six years ago, the possibility was raised for municipalities to collaborate in the collection of taxes such as VAT, one of the two most important taxes in our tax structure, along with the ISR, which is managed by the federal government. VAT replaced the Commercial Income Tax in 1980 and had its first application in France in 1965. In Mexico, it was approved in the Chamber of Deputies in 1978 under the management of David Ibarra and President López Portillo, but its legislation was delayed until 1980 due to criticism about its possible inflationary effect, initially established with a rate of 10 percent.
The tax system in Mexico is concurrent, which means there can be double taxation, where both states and the federal government can apply taxes. However, by adhering to the national fiscal coordination system, states temporarily suspend the use of some of these tax powers in exchange for receiving shares, that is, a percentage of federal tax collection, also known as federal taxes.
For a time, federal entities collected VAT, but this system failed due to inequalities in refunds and lack of efficiency. As for municipalities, their main responsibility is the collection of property tax, although results have been poor. The possibility of implementing a state sales tax instead of VAT was discussed, resulting in low collection and a failed experience.
To improve the situation, greater political will is needed. Despite this, the SAT has demonstrated efficiency in federal tax collection, with increases in shares reflected in GDP, except in times of crisis. However, it is important for subnational and local governments to comply with the collection of taxes such as vehicle tax and property tax and to use resources transparently and honestly.
It is crucial for states to assume their fiscal responsibilities, as some eliminated vehicle tax for political reasons and later turned to the SHCP for support. Furthermore, fiscal coordination should occur between states and the federation, while municipalities coordinate with state governments. On the other hand, property tax collection is concentrated in a small number of municipalities compared to the total at the national level, indicating the need to improve efficiency in local tax collection before considering additional tax reforms.
