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Reconstructing cities: Stimulating redevelopment through the tax code

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  • Goeyvaerts, Geert

Abstract

The welfare effect of urban renewal policies depends on the size of the external effects and the quantity of the building stock that gets redeveloped. While evidence on the externalities is growing, there is still a need for credibly identified estimates of the responsiveness of redevelopment. I exploit a sharp reduction in the value-added tax (VAT) on construction services for redevelopment in a select group of 32 Belgian cities to fill this gap. The results show that a 15 percentage point reduction in the VAT rate leads to an increase in the amount of demolished and redeveloped floorspace of respectively 36% and 35%.

Suggested Citation

  • Goeyvaerts, Geert, 2023. "Reconstructing cities: Stimulating redevelopment through the tax code," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:regeco:v:99:y:2023:i:c:s0166046223000157
    DOI: 10.1016/j.regsciurbeco.2023.103880
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    References listed on IDEAS

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    More about this item

    Keywords

    Redevelopment; VAT reform; Place-based policies; Residential investment;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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