Reconstructing cities: Stimulating redevelopment through the tax code

Geert Goeyvaerts

Regional Science and Urban Economics, 2023, vol. 99, issue C

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%.

Keywords: Redevelopment; VAT reform; Place-based policies; Residential investment (search for similar items in EconPapers)
JEL-codes: H22 H23 H25 R21 R28 R31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:99:y:2023:i:c:s0166046223000157

DOI: 10.1016/j.regsciurbeco.2023.103880

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