Mexico’s low property taxes could soon be increasing

Mexico's property tax is called "predial." (PHOTO: Mexico Nueva Era)

Property owners in Mexico enjoy very low property taxes but that could soon change.

Mexico’s Finance Secretary said on Tuesday during the 100th general assembly of the American Chamber of Commerce of Mexico that the tax, known as predial, represents “a great area of opportunity.”

José Antonio Meade said property taxes achieve two important objectives: as a revenue source for municipal governments and as a tool for urban development.

But the tax rate is low compared to other jurisdictions.

He said the tax generates the equivalent of just 0.2% of Mexico’s Gross Domestic Product while in Latin America as a whole it represents 1.7%.

Mexico's property tax is called "predial." (PHOTO: Mexico Nueva Era)
Mexico’s property tax is called “predial.” (PHOTO: Mexico Nueva Era)

For member countries of the Organization for Economic Cooperation and Development the percentage rises to 2.2% and in the United States it’s 3.2%.

Given tight finances due to the economic situation it was time to take advantage of the municipal tax base, Meade said.

Ideally, he said, local governments could finance their requirements with their own income.