Introduction

Given that assessing the sources of local revenue is essential when financing infrastructure, the objective of this article is to study what has been termed as the border effect in the collection of property taxes. Previous research has empirically shown that, after controlling for demographic, fiscal and economic differences, municipalities located in the northern border region collect more property tax per capita than non-border municipalities. These studies used data from the states of the northern border region. This article expands the literature by estimating the border effect of property tax collection in Mexico. Unlike previous studies, the estimates presented here use data from all Mexican municipalities from 2010 to 2019. With our approach, it is possible to verify whether the border effect is maintained and, if applicable, to validate previous estimates. This analysis proposes that border regions should use their own resources to finance infrastructure and discusses the fiscal institutional determinants of property tax collection.

The article is organized as follows. The next section contextualizes the border effect in terms of fiscal institutions and local financing of infrastructure. The third section discusses the relevant literature. The fourth section explains the methodology. The fifth section presents results. The final section presents the paper’s conclusions.

Infrastructure, fiscal institutions and the border region

Based on an assessment of the empirical literature on the determinants of property taxes in Mexico, there are two aspects that are important to consider when analyzing the northern border effect in the collection of property taxes. The first concerns how this effect has been interpreted, whereas the second concerns local financing in the northern border region. In effect, it has been argued that the higher revenue collection of border municipalities reflects differences in fiscal institutions, as defined in ^{Stein et al. (1999}), at the subnational level. These institutions consider three categories of budgetary rules and procedures: those that set numerical references on fiscal variables, those that govern the budgeting process and those associated with the transparency of the budgetary process.

The 1983 and 1999 reforms of Article 115 of the Constitución Política de los Estados Unidos Mexicanos (Political Constitution of the United Mexican States), which made property taxes a source of revenue for municipalities and allowed defining a municipal legal and regulatory framework to collect this tax, have been key in the existence of fiscal institutional differences between Mexican states and municipalities.¹ In this regard, ^{Cabrero Mendoza (2013}) notes that

the wave of constitutional reforms in the 1980s and 1990s granted Mexican states and municipalities unprecedented powers and responsibilities. This period marks a major transition from a de jure to a de facto more dynamic federalism, in which subnational governments have become defining actors of local and national policy as well as agents of strategic change and promoters of development and well-being. (p. 16)

The possibility of adapting the fiscal institutional framework has made it possible to respond to the demographic and economic dynamics (which translate into greater demand for goods and services provided by governments) with measures that can take advantage of the potential of the property tax. According to a recent report by Ethos (^{Alvarado, 2021}), low property tax collection in Mexico is due to four elements: administrative factors, political factors, economic factors and taxpayer incentives. A study on Latin America by ^{Sepúlveda and Martínez-Vázquez (2011}) shows that in addition to the cadastre system the decentralization arrangements in relation to the tax are also important. As those researchers note, the latter has received less attention as a determinant of property tax collection. In effect, for the property tax to be a productive source of fiscal revenue,

the decentralization of property tax also requires that local authorities be politically accountable to their communities, be endowed with a significant degree of fiscal autonomy, face the correct incentives within the context of central government policies, and have sufficient administrative capacity to carry out tax and expenditure policies. (pp. 2-3)

The demographic and economic dynamics observed in the northern border region of Mexico impose a need to invest in infrastructure. ^{Wilson and Lee (2013}) observe that the commercial relationship between Mexico and the United States requires infrastructure to function effectively; that one of the most obvious and frequently cited ways to reduce congestion at ports of entry is to update and expand the infrastructure of border crossings; and that for the border region to reach its potential to develop and exchange renewable energy across the border, it is necessary to construct electricity transmission infrastructure. They also recognize not only a deficient water and sewerage infrastructure along the border but also the emergence of new challenges in the environmental field: a change in the importance of issues ranging from pollution control to natural resource conservation. They estimate that coming to terms with these new challenges will involve an investment of between 12 000 000 000 USD and 20 000 000 000 USD in environmental infrastructure over the next 20 years (^{Wilson & Lee, 2013, p. 132}).

Similarly, ^{Erickson and Eaton (2002}) consider that increasing environmental deterioration along the border has raised concerns regarding the promotion of sustainable economic development. An important element in this regard is the provision of environmental infrastructure for drinking water, wastewater treatment and solid waste management.

The need for border infrastructure was evident even before the signing of the North American Free Trade Agreement (NAFTA). ^{Gilbreath (1992}) notes that

industrial integration between Mexico and the United States has provided the basis for a border manufacturing, retailing, and agro-industrial economy. But this growing industrial base has created infrastructure and natural resource strains that threaten the economic vitality of the region. Infrastructure and environmental concerns are closely linked, because the failure to provide sufficient public infrastructure has led to pollution of this region’s dwindling resource base. Border communities and states have asked both federal governments to incorporate these concerns within negotiations for the proposed North American Free-Trade Area. Their reasoning is that if free trade will expand the economic activity of the region, it must also take into account the regional strains that such activity will generate. (p. 151)

This need for infrastructure leads precisely to the second aspect noted above: local financing in the municipalities of the northern border region of Mexico. The study by the Wilson Center on the Mexico-United States border (^{Wilson & Lee, 2013}) provides an analysis of the main issues of the region in the binational relationship. The analysis considers quality of life, the economy, security and sustainability. Regarding all these factors, financing and investment in infrastructure are fundamental to the binational agenda. The report recognizes that both countries have

aggressively pursued actions to reduce the lingering deficits in their respective territories and jointly address chronic development gaps affecting both sides of the border. These include the promotion of trade and regional economic growth; substantial investment in environmental infrastructure; development of local capacity for planning and governance; and the creation of a new institutional framework for cross-border cooperation. (p. 24)

Different options have been devised to address the financing of infrastructure at the border. ^{Erickson and Eaton (2002}) consider financing through taxes, general obligation bonds, revenue bonds, contracting with the private sector and philanthropy. The alternative approach of a binational bond financing mechanism for the strategic development of border infrastructure has also been studied ^{(Espinosa, 2012}; ^{Espinosa & Moreno, 2014}; ^{Sankaran et al., 2013}). Traditionally, border infrastructure projects─such as international ports of entry, border crossings, water treatment plants and water management facilities─have been financed with grants and federal transfers. ^{Frisvold and Caswell (2002}) note that the lack of local taxes and the centralized allocation of funds for infrastructure are impediments to the development of border infrastructure.

This article studies the determinants of property tax collection, the most important source of tax revenue for Mexican municipalities. We propose to analyze how the fiscal institutions of the municipalities located in the northern border region influence the collection of municipal revenue. In particular, the difference in the property tax revenue of the border municipalities from that of municipalities outside that region is calculated. If fiscal institutions prove to be important in the collection of local tax revenues, institutional change could represent a basis thorough which local municipalities could obtain own-revenue to potentially finance infrastructure development on the Mexican side of the northern border. Because local revenues could be used to finance local infrastructure, this issue is important to the bilateral agenda.

This approach does in fact represent a real possibility for financing. The Center for Budgetary and Policy Priorities (^{McNichol, 2017}) argues that subnational governments should address unmet infrastructure needs by taking advantage of low interest rates to finance loans or using other sources of revenue (e.g., fees, tolls, federal subsidies or new taxes) to finance schools, roads, water treatment facilities and the like. In Mexico, the idea that municipal governments can participate in social infrastructure projects is explicitly recognized in the transfer system. In particular, the Social Infrastructure Contributions Fund (FAIS in its Spanish acronym) allocates federal aid to state and municipal governments for social infrastructure with the purpose of reducing poverty. This fund distributed 85 854 000 000 MXN in 2020 (^{Diario Oficial de la Federación [DOF], 2020}).

In support of the preceding view, ^{Brockmeyer et al. (2021}) argue that among local taxes the property tax has the greatest untapped potential in developing countries. The possibility of financing local infrastructure with revenue from property taxes is addressed in their study. They show that despite a lack of compliance in the payment of this tax, adjustments in the tax rate and the application of the associated regulations can be useful strategies for increasing tax revenue. An additional argument regarding infrastructure financing was advanced by ^{Espinosa and Martell (2015}). They find that the establishment of a property tax system increases the number of financing tools available to municipalities because the revenue from this source improves the ability to pay in bond issues in the capital market.

Regarding the financing of infrastructure on the border between the United States and Mexico, ^{Frisvold and Caswell (2002}) consider that water conservation should be implemented as part of a regional water management strategy, while ^{Frisvold and Osgood (2011)} argue that water projects should be self-financed at the local level. However, as ^{Gurara et al. (2017)} observe, one challenge to improving infrastructure is “mobilizing domestic resources for public investment by increasing tax revenue and streamlining and prioritizing expenditures” (^{Gurara et al., 2017, p. 9}).

In different areas, the lack of financing for infrastructure on the border between the United States and Mexico is evident. ^{Frisvold and Caswell (2002}) note the following:

Border cities, however, face a number of constraints limiting their abilities to self-finance water infrastructure. Because of political and financial risks associated with these investments, it is difficult to obtain long-term financing through international markets. Lack of capital at the local level further raises local financing costs. In addition, Mexico’s legal system limits the ability of local governments to issue bonds against user fees or real estate taxes. (p. 152)

^{Frisvold and Osgood (2011}) consider that the objective of developing locally self-financed municipal water systems on both sides of the border has remained elusive. The question of which level of government in Mexico can or will pay for future investments in water infrastructure remains uncertain.

According to ^{Erickson and Eaton (2002}), the main impediments to meeting the needs of environmental infrastructure in border communities are the lack of human capital to plan, implement and maintain environmental infrastructure and the limited capacity of communities to obtain affordable financing for the construction of the necessary projects (^{Erickson & Eaton, 2002, p. 204}).

Although financing for the development of border infrastructure is mobilized in part through the North American Development Bank (NADB), “the magnitude of available financing is woefully inadequate when compared with the growing needs of the region and begs for alternate means of financing” (^{Sankaran et al., 2013}, p. 71). Consequently, and as ^{Espinosa and Moreno (2014}) observe, the potential of the border region has been limited by an increasing gap between infrastructure needs and available financing.

A report by the United Nations Organization (^{UN-Habitat, 2015}) on the disparity between the fiscal need and the fiscal capacity of local governments in developing countries applies well to border municipalities on the Mexican side:

Local authorities in all parts of the world play an increasingly important role in the delivery of fundamental basic public services. However, authorities also confront great challenges. Most local authorities in developing countries are facing increasingly larger challenges as a result of rapid and chaotic urbanization as well as the impacts of frequent natural disasters caused by climate change. The recent global financial and economic crisis has further aggravated these challenges.

The fundamental problem confronting most local authorities, especially those managing cities in developing countries, is the widening gap between the availability of financial resources and municipal spending needs. One of the main reasons for this increasing fiscal gap is the rapid growth of urban populations, which creates an ever-increasing demand for public services as well as new public infrastructure and its maintenance.

Most cities in developing countries primarily depend on central government transfers, with lesser revenues derived from property taxation and service charges. The more lucrative sources of revenue potentially suitable for financing urban areas, such as income taxes, sales taxes and business taxes, continue to be controlled by central governments. Where local authorities are able to derive revenues from property taxes and service charges, meaningful tax increases are occasionally refused or delayed by central governments for fear of eroding political support from the urban population or even rejected by the local authorities themselves for fear of political backlash from local taxpayers. In most countries, there are immense vertical imbalances at the subnational level in terms of sharing responsibilities and available fiscal resources. Stated differently, many central governments refuse to pay the political and financial costs of the decentralization of roles and responsibilities. (p. 8)

Literature on property taxation in Mexico

In this section, we review the empirical literature on the determinants of property tax collection in Mexico. One issue that has been addressed by researchers is how federal transfers influence property tax collection. This relationship has been studied using a panel of aggregated state-level data (^{Unda Gutiérrez & Moreno Jaimes, 2015}) and panel data of the municipalities (^{Broid Krauze, 2010}; ^{Canavire-Bacarreza & Zúñiga Espinoza, 2015}; ^{Chávez Maza & López Toache, 2019}; ^{Espinosa et al., 2018}). Several of the most recent studies on the effect of transfers on property tax collection, such as that of ^{Chávez Maza and López Toache (2019)}, find that the main limitation in property taxation is the policy of federal transfers. ^{Espinosa et al. (2018)} analyzed a panel of 2 267 municipalities during 2008-2013. They find that both participaciones and aportaciones federales per capita have a direct and statistically significant relationship with property tax collection.

The influence of the political environment and institutional capacities on property taxation has been analyzed by ^{Broid Krauze (2010}) and by ^{Unda Gutiérrez (2018}). The first studied the influence of the competitive political environment, while ^{Unda Gutiérrez (2018)}, through semi-structured interviews performed in six municipalities, analyzes the effect of institutional capacities and the political cost of adjusting property value and taxation rates.

The most recent studies on the determinants of property tax collection in Mexico are by ^{Ibarra Salazar and Sotres Cervantes (2021}) and ^{Unda Gutiérrez (2021}). ^{Ibarra Salazar and Sotres Cervantes (2021)} study the differences in fiscal institutions of the border states and municipalities, while ^{Unda Gutiérrez (2021)} uses municipal panel data from 1990 to 2010 to analyze the determinants of property tax collection. This latter study includes economic, fiscal, political-electoral and administrative determinants. In connection with administrative determinants, the institutional capacity of the property tax is considered. To approximate institutional capacity, four variables are considered: two to reflect the structure of human resources (i.e., the proportion of base employees in the municipality and the proportion of trusted personnel) and two to indicate the effort associated with the collection of property tax (i.e., updating values and updating the cadastral register).

The origin of our study is found in a series of articles that have estimated the difference in property taxation between municipalities located in the northern border region and those that are not in border regions. In these articles, data from the municipalities of Tamaulipas (^{Ibarra Salazar and Sotres Cervantes, 2009}), Coahuila (^{Ibarra Salazar & Sotres Cervantes, 2013}), Chihuahua (Ibarra Salazar & Sotres Cervantes, 2014) and Sonora (^{Ibarra Salazar & Sotres Cervantes, 2015}) were used. More recently, ^{Ibarra Salazar and Sotres Cervantes (2021)} employed data from all municipalities located in the northern border states to estimate the northern border effect. It is interesting to note that these studies focus on border states. The effects that have been estimated, although incorporating the differences between the municipalities of the border region, do not include municipalities of states outside the northern border of Mexico in the analyzed databases. This fact could bias current estimates because by limiting data regionally, a set of municipalities with important differences from those located in border states is omitted. By incorporating in the database all the municipalities of the country, a greater variety of fiscal institutional frameworks as well as economic and demographic differences among the various regions of Mexico could be considered.

Methodology

Results

The estimation results and tests of hypothesis described in the previous section are presented in Tables 3 to 5. Table 3 provides the estimates of the different models. Table 4 includes the tests on the institutional framework and border effect. Table 5 shows the test statistics for the differences in per capita property tax collection between border and non-border municipalities.

Regarding the control variables considered in the models, it is interesting to note that, as expected, the approximation to PCIM displays a direct and statistically significant relationship with per capita property tax collection in the five estimated models. According to the results in Table 3, the estimated marginal effect of a change, for example, of $1 000 pesos in PCIM, increases property tax collection from $1.13 in Model 2 to $1.40 in Model 5. Thus, if per capita income increases by $1 000 pesos, the estimates indicate that the property tax collection will increase between $1.13 and $1.40 pesos per capita. The consistency of this estimated value is notable in the models estimated with fixed effects (Models 3 and 5) and those that did not include fixed effects in their estimation (Models 1, 2 and 4).

It is expected that population density, which is the demographic variable included in the specifications, has a direct relationship with property tax collection. The results in Table 3 show that the estimated parameter in all models was positive, and the population parameter was highly significant from the statistical perspective. It can be noted that the test statistic rejects the null hypothesis that the population parameter is equal to zero with a significance level below 5%.

The effect of transfers on property tax collection has been a topic of interest in related studies (^{Broid Krauze, 2010}; ^{Canavire-Bacarreza & Zúñiga Espinoza, 2015}; ^{Chávez Maza & López Toache, 2019}; ^{Espinosa et al., 2018}). In this case, as shown in Table 3, it was found that per capita transfers have an inverse relationship with per capita property tax collection, although this result is not statistically significant. In effect, the test statistic for this case does not allow rejecting the hypothesis that the population parameter of the variable T is different from zero. In view of the findings in previous studies and given that the variable T includes participaciones and aportaciones federales, this result should be viewed with caution.

To control for political differences between municipalities and over time, two variables were considered: the political affiliation of the municipal president and the periods of government, which are also referred to as electoral cycles in the literature on the effects on fiscal variables of the political environment (^{Blais &. Nadeau, 1992}; ^{Galli & Rossi, 2002}; ^{Nelson, 2000}). Regarding the first variable, only the parameter of the binary variable that indicates political affiliation with PAN was positive and significantly different from zero in all models (Table 3). The consistency of the estimated value of this parameter in the five models is highlighted. This result represents statistical evidence that municipal governments led by municipal presidents affiliated with the PAN observed a higher per capita taxation─$16.4 to $16.7 is the estimated range─compared to the omitted class, which in this case are all political parties nationally registered but with a lower number of activists than the PRI, PAN, PRD or Morena,⁷ political parties with state registration, independent citizens, municipal councils, and tradition and customs. The municipal governments headed by mayors politically affiliated with other political parties (PRI, PRD, Morena) do not exhibit differences in the collection of property tax per capita with respect to those municipalities headed by the classes omitted in the binary variables.

The estimated parameters of the variables associated with the electoral cycles are not included in Table 3 because of space constraints.⁸ Suffice it to say that the marginal impact of the municipal government periods was positive and statistically significant in the states of Colima, Guanajuato, Jalisco, Mexico, Michoacán, Morelos, Quintana Roo, Sinaloa, Tamaulipas, Veracruz and Zacatecas.

The central interest in this research is to determine the state-level effects of the fiscal institutions of the northern border municipalities. To this end, using Models 3 and 5, which were estimated with state fixed effects, the F test statistic was calculated to determine if there is evidence that the ε parameters in Model 3 are the same. If so, the correct specification would be Model 1. Similarly, starting from Model 5, it should be tested whether this model reduces to Model 2, which imposes a single constant instead of state fixed effects. The test statistics appears in Section I of Table 4. In both cases, the null hypothesis can be rejected. This finding indicates that, regardless on how the property tax model is specified, with the global border effect (Model 3) or with the partial border effect of the different zones (Model 5), there is clear evidence that the differences in fiscal institutions help explain the variations in per capita property tax collection over time and between municipalities.

The results to tests the border effect on property tax collection are presented in part II of Table 4. In the first instance, according to the calculated statistics, there is evidence that the global effect, estimated in Models 2 and 3 through the parameter ε, is significant in explaining the variations in property tax collection. The test statistics F = 5.20 and F = 4.83 for Models 2 and 3, respectively, indicate that the null hypothesis can be rejected at a significance level lower than 3% in each case. Regardless of whether state fixed effects are considered or not, it can be noted that the identification of border municipalities is important in the specification to explain the per capita property tax. An approximation of this effect appears in the estimated values of the parameter ε in Table 3. With Model 2, which does not include state fixed effects, the global border effect is $75.22 per capita, while with Model 3, which includes state fixed effects, this value is $73.94 per capita. These estimated values are slightly larger than the $69 pesos per capita obtained in ^{Ibarra Salazar and Sotres Cervantes (2021}) when using data from the municipalities belonging to northern border region states.

The result which incorporates the particular northern border effects, as is the case of Models 4 and 5, is consistent with the previous result. In this case, the hypothesis is that the ε parameters in specifications 4 and 5 are jointly equal to zero. The test statistics (F = 3.70 and F = 4.87) indicate that the null hypothesis should be rejected in both models (Table 4). Thus, whether the property tax collection model specifies state fixed effects or does not, the border effect (whether global or specific to border states) is important for explaining the variations in property tax collection of Mexican municipalities. Again, the difference between the ε parameters that are estimated in Models 4 and 5 can be noted. In the first case, because the constant term is common, the hypothesis that is being rejected is that, jointly, the particular border effect of the border municipalities of each state is not statistically significant. In this way, there is evidence that, jointly, the particular border effect is relevant in explaining the property tax collection in the Mexican municipalities. In the second case, the constraint imposed on Model 5, which includes state fixed effects, is about the difference in property tax collection of border municipalities compared to non-border municipalities located within the same federal entity. In this case, the hypothesis that the particular border effect is null is also rejected.

The ε parameters, estimated from Model 4 (Table 3), present the particular border effects of the municipalities located in the different states of the border region. All the parameters are positive, and those corresponding to the municipalities of Chihuahua and Tamaulipas are statistically significant. The estimated values of these parameters provide an approximation of these effects. Given the control variables and the assumption of a common constant in Model 4, the parameter ε ₁ = 27.04 is an estimate of the difference in property tax collection per capita of the border municipalities of Baja California and the non-border municipalities. The parameters ε ₂ = 70.80 for Sonora, ε ₃ = 119.49 for Chihuahua, ε ₄ = 76.46 for Coahuila and ε ₅ = 54.98 for Tamaulipas should be interpreted in the same way.

An additional aspect in relation to the particular border effects is their uniformity. According to the results in Table 4, the null hypotheses that ε ₁ = ε ₂ = ε ₃ = ε ₄ = ε ₅ , which were applied to Models 4 and 5, cannot be rejected. That is, there is no evidence that these effects are different.

Hypothesis tests were also formulated to determine joint characteristics of the effect of state fiscal institutions and the border effect. The results are shown in part III of Table 4. With Model 3 it is jointly test whether there is no difference in the effect of fiscal institutions between the states and if the border effect is null (test #9). With Model 5, two joint hypotheses are examined: whether the border effects between the states that belong to that region are equal and if the institutional effect between the states is uniform (test #10); and whether the institutional effects of the states are equal and the state border effects are jointly null (test #11). As indicated by the test statistics, there is evidence that the three hypotheses are rejected.

As indicated in the methodology section, the database used in this article enables us to make statistical inferences regarding the particular border effect and, all things being equal, to compare the per capita property tax collection for border municipalities of each border state with that of the non-border municipalities in any state of the Mexican Republic. The estimated values of these differences and the test statistics are shown in Table 5. The interpretation of the numbers presented in Table 5 is as follows: each number is an estimate of the difference in the per capita property tax collection of the municipalities of the border state indicated in the first row of the table compared to the non-border municipalities of the states in the first column of the table. To illustrate, the first value in the CHIH column indicates that, given the control variables used to estimate Model 5, the border municipalities of Chihuahua collect $280 pesos per capita more than the municipalities of Aguascalientes. The test statistic, which appears in parentheses (t = 3.77), also indicates that this difference is statistically significant.

The border effects on property tax collection appear to be concentrated in the states of Baja California and Chihuahua, where the average annual collection per capita is $284 and $408 (constant 2018 pesos), respectively, for the period under study. In Table 5, it can be noted that in the columns that correspond to these states, BC and CHIH, the estimated values of the differences are positive and statistically significant for a good number of cases: 15 for Baja California and 22 for Chihuahua.

It is also interesting to note that for Baja California there is no significant difference between the collection in the border and non-border municipalities of that state; that the border collection of property tax in the state of Tamaulipas is only larger than that in the municipalities of Campeche, Tabasco and the non-border municipalities of Tamaulipas; and that there is no evidence that, given the controls used to estimate Model 5, the per capita property tax collection of the non-border municipalities of Baja California, Baja California Sur, Colima, Jalisco, State of Mexico, Morelos Querétaro, Quintana Roo and Zacatecas is lower than that of the border municipalities of Mexico.

Finally, we discuss the hypothesis tests on the joint restrictions of the institutional framework and the border location of the municipalities. Using Model 3 it was jointly tested if there were no institutional differences (α ₁ = α ₂ = α ₃ = ... = α ₃₁ ) and if the border effect was null (ε = 0), while with Model 5 it was jointly tested if the effect of state fiscal institutions (α ₁ = α ₂ = α ₃ = ... = α ₃₁ ) and the particular border effect were uniform (β ₁ = β ₂ = β ₃ = β ₄ = β ₅ ), and if the effect of fiscal institutions was uniform, while the border effect was zero (β ₁ = β ₂ = β ₃ = β ₄ = β ₅ = 0). As corroborated in section III of Table 4, the three joint hypotheses were rejected.

Conclusions

This article has studied the effect of fiscal institutions on the collection of property taxes. The effects at the state level and those that may occur in the municipalities located on the northern border of Mexico have been incorporated. The so-called northern border effect on property tax collection had been estimated using data from municipalities belonging to the states of the northern border region. This paper extends empirical work on the determinants of property tax by using a panel of Mexican municipalities from 2010 to 2019.

The results confirm the global border effect. It was found that the parameter of the variable that identifies the border municipalities was positive and statistically significant regardless of whether state fixed effects are considered or not. Consistent with previous studies, the estimate ranged from $74 to $75 pesos per capita. Given the nature of the database and the control variables used in the models, it was possible to analyze this effect in particular to compare the collection of property tax in the border municipalities in the different states with that of the non-border municipalities.

The results indicate that the fiscal institutional framework is an important factor in explaining the variations over time and the differences between municipalities in property tax collection. This result is of substantial importance when considering the financing of infrastructure in the northern border region. Much of this article has focused on the need for infrastructure in this region and the possibility of local financing. More specifically, the central argument in light of the results is that the reform of fiscal institutions would facilitate taking advantage of the potential of the property tax to finance infrastructure with local resources.

In support of these conclusions, ^{Cabrero Mendoza (2013}) notes that institutional and administrative capacities are important in the collection of local tax revenues. In particular, the factors that can help develop these capacities are horizontal information exchange, democratic intensity of local public action, budgetary institutions and regulatory framework, emerging organizational structures and the qualifications and professional profile of local authorities. In this article, reference has been made to fiscal institutions as a differential element for identifying the border effect in property tax collection. It would be interesting to examine the quantitative elements of the factors listed by ^{Cabrero Mendoza (2013)} to determine whether they effectively induce more property tax collection in Mexican municipalities. It is interesting to note in this regard that ^{Von Hagen (1992}) and ^{Von Hagen and Harden (1995)} present methods for calculating an index of fiscal institutions.