This article analyzes the factors explaining the differences among states in collecting the property tax in Mexico during the 1969-2010 period. We concentrate on some variables that the literature has identified as determinants of tax collection performance, emphasizing the substitution effect hypothesis which asserts that local governments reduce their taxation when they have access to alternate funding sources with fewer political costs. We also analyze the effect of two constitutional reforms to article 115 that aimed to improve property tax collection. Based on an econometric model with panel data, our results show that only conditional transfers (from the Ramo 33) have a negative effect on local taxation, but revenue-share transfers from the federal government no dot. The main obstacle that the property tax faces to improve its performance comes from rural areas for three reasons: the property value is low, local governments have weaker administrative capacities to collect taxes, and the Mexican ejido has historically be exempted from paying the property tax. Finally, we show that the constitutional reforms were ineffective in improving the tax-collection performance of municipalities.