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Collateral value and entrepreneurship: Evidence from a property tax reform

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  • Miguel A. Ferreira
  • Joao Pereira dos Santos
  • Ines Venancio

Abstract

We study the role of property taxes on entrepreneurial activity using a quasi-natural experiment, which unexpectedly reduced the upper bound of the Portuguese property tax rate for urban properties in 2008. Using a diffrence-in-differences approach, we nd that treated municipalities (i.e., municipalities that had a property tax rate above the new upper bound) experienced higher entry rates in the manufacturing sector vis-a-vis control municipalities (i.e., municipalities that had a property tax rate at or below the new upper bound). Taking advantage of rm-level data, we show that start-ups created as a response to the decrease in property taxes in treated municipalities use more debt, invest more, and are more likely to survive.

Suggested Citation

  • Miguel A. Ferreira & Joao Pereira dos Santos & Ines Venancio, 2022. "Collateral value and entrepreneurship: Evidence from a property tax reform," Nova SBE Working Paper Series wp643, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp643
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    Cited by:

    1. António Afonso & Ana Venâncio, 2022. "Local Property Tax Reform and Municipality Spending Efficiency," CESifo Working Paper Series 9538, CESifo.

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    More about this item

    Keywords

    Entrepreneurship; Property taxes; Savings; Portugal;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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