VAT reduction for the catering industry: who benefits?

Laurent Hanseeuw and Jean Hindriks analyze the effects of a VAT reduction for the catering industry, introduced in Belgium in 2010. First, they review the economic fundamentals pleading for such a favorable rate. Then they analyze the impact of this reduction based on the reasons which have been used to justify such a reduced rate. We can conclude that the impact has been fairly modest when it comes to job creation and that the sector remains heavily exposed to the black economy.