Taxpayers and Municipal Finances: An Account for Mexico in the Early Twentieth Century

In 1896 José Ives Limantour completed one of the most noticeable achievements of his administration as Finance minister and for the Porfiriato (1876-1988) as a whole: the abolition of the alcabalas (internal customs) in all states of the Republic. Although the 1857 Constitution explicitly ruled on the extinction of this fiscal legacy of the colonial times, the weight of the alcabala revenue on state finances became a major obstacle for the compliance with the law. By the end of the nineteenth century only a handful of states fulfilled the Constitutional mandate and in doing so they introduced new taxes to make up for the lost revenue. The same was true after the end of the alcabalas: state legislatures approved new taxes seeking to compensate state treasuries for the losses. At municipal level those localities that shared a certain percentage of the alcabala collection lost it too. Perhaps more importantly, the reconfiguration of state finances discouraged or halted the modernization of municipal tax structure thus leading to the weakening of local finances in the following years.

My research focuses on municipal public finances at the end of the Porfiriato and it is primarily concerned with studying the taxpayer reaction to new and old taxes. My paper focuses on a detailed analysis of the taxes charged by the municipalities of most states c. 1910. Using a classification of taxes I relate municipalities’ revenue to that of the state and federal governments. Tax burden at municipal level shows regional patterns and offers an account of the relative strength of local governments. Finally, a data base of judicial records provides an account on how tax payers faced municipal taxes in a context of changing fiscal environment.