TITLE:
Determinants of Subnational Tax Collection in Federal Contexts: A Case Study of Mexico
AUTHORS:
Daniel Eduardo Paz-Pérez
KEYWORDS:
Fiscal Effort, Optimal Taxation, State Revenue, Mexico
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.13 No.8,
August
25,
2025
ABSTRACT: The study of taxation is essential to understanding the processes that encourage or hinder revenue collection. In Mexico and other federal countries, subnational governments may levy certain taxes, yet revenue outcomes vary considerably. This research identifies the determinants of subnational tax collection in Mexico, focusing on characteristics of the collecting authority, socioeconomic factors, and the degree of governmental independence. Data on state-level public revenues were obtained from primary sources: financial authorities, treasuries, and state auditing bodies. The analysis employed multiple linear regression based on significant correlations among the studied variables. Findings indicate that the total number of businesses established in every state, number of reported salaried employees, as well as tourism infrastructure (measured by the number of hotel room-nights occupied annually) are associated with fiscal effort. Results show that Mexican states collect less than their counterparts in other federal countries due to restrictions in the legal tax system, and that their fiscal effort has seen minimal growth over the past decade.