Votes and levies: The political economy of property taxation in Belgian provinces

This paper studies the impact of electoral cycles on property tax rates across Belgian provinces. Variations in tax rates are particularly observed around election periods. Analysing literature, which suggests that politicians strategically adjust tax rates to influence voter behaviour—lowering them in the pre-election and election years and raising them afterward—this research aims to analyse whether similar phenomena exist in Belgian provinces. Using panel data covering multiple election cycles, we elaborated a fixed effects model to estimate the effect of election cycles on property tax rates, focusing on the year before, during, and after elections. Two key control variables identified in the literature were included despite using fixed effects: population size and the tax base, proxied by the average primary income per household. The findings confirm a significant drop in property tax rates during election years and an increase in the year following elections, which corroborate theoretical expectations. However, contrary to much of the existing literature, the results for the year preceding elections are not statistically significant, suggesting a weaker anticipatory tax-cutting behaviour among Belgian provinces. These results highlight the influence of electoral incentives on fiscal policy and the importance of contextual factors in shaping these dynamics.