Background on Alfonso Ramírez Cuéllar
Alfonso Ramírez Cuéllar is a prominent Mexican legislator known for his advocacy in public finance and local government development. As a member of the Mexican Congress, he has been vocal about the challenges faced by local governments in securing adequate funding for infrastructure, public services, and urban equipment.
The Current State of Local Finances in Mexico
Mexico’s local governments grapple with insufficient resources to meet basic infrastructure, public service, and urban equipment demands. This shortfall is exacerbated by the low levels of digitalization and registration linkage in their catastral systems. The country’s public investment by federal entities in 2024 was 140,742 million pesos, which remains inadequate compared to the pressing needs for infrastructure, urban equipment, and public services.
According to the OECD, Mexico’s subnational public investment accounts for only 1.0% of its GDP, placing it last among federal republics, where the average is 1.9%.
Ramírez Cuéllar’s Proposals
During the “Sustainable Public Finances and Investment Promotion for Subnational Governments: Mobility, Catastral Systems, and Investments” forum in Morelos, Ramírez Cuéllar emphasized the urgent need to transform local finances and advance towards a new fiscal autonomy model.
Two model state laws were presented at the forum: one on registration and catastral matters, and another concerning the vehicle tenancy and use tax. Both proposals aim to bolster local revenue collection capabilities while promoting financial autonomy.
The Potential of Local Tax Reforms
In 2024, the property tax collection amounted to 82,998 million pesos, reflecting a mere 1.3% real growth. Ramírez Cuéllar pointed out that if Mexico reached the Latin American average of 0.38% of GDP in tax collection, it could generate an additional 59,000 million pesos annually, which could be allocated to infrastructure projects, basic services, and urban equipment.
Moreover, he highlighted the significance of modernizing catastral and registration systems as cornerstones for local finances’ sustainability.
Technological and Registration Challenges
Currently, only 1,628 out of 2,458 municipalities have digital inventories, and a mere 504 have linked their cartography to the inventory, showcasing the technological lag in this area.
The Untapped Potential of Vehicle Tax
Fifteen federal entities in Mexico currently apply the vehicle tenancy tax. If generalized, this tax could generate over 42,000 million pesos annually, or even up to 76,000 million pesos under a federal scheme, bolstering subnational investment in mobility and infrastructure.
Key Questions and Answers
- What is the main issue addressed by Alfonso Ramírez Cuéllar? Ramírez Cuéllar focuses on the need to strengthen local finances in Mexico amidst low investment from both state and municipal governments, as well as the outdated catastral systems.
- Why is it crucial to modernize catastral systems? Modernizing catastral systems is essential for enhancing local finances’ sustainability and ensuring equitable, competitive revenue collection.
- What are the potential benefits of implementing vehicle tenancy tax nationwide? A nationwide implementation could generate significant annual revenue (over 42,000 million pesos) to be invested in subnational mobility and infrastructure projects.
- What are the current challenges faced by Mexican local governments? Local governments struggle with insufficient resources to meet infrastructure, public service, and urban equipment demands due to low digitalization levels in catastral systems and inadequate public investment.
