Marco González-Navarro and Climent Quintana-Domeque
Does property tax compliance improve when the supply of local public goods expands? This paper uses administrative property tax records and information on the rollout of first-time asphalting of streets in inhabited residential neighborhoods in Mexico to show that the provision of local public goods can improve property tax compliance rates. We put forward a simple explanation to link local public goods and property tax compliance: When citizens observe public goods being delivered, they update their beliefs about the government’s quality in public good provision and become more likely to comply.
JEL Classification Codes: H26, H41
Keywords: taxpayer behavior, property tax compliance, local public goods