On the Incentive Effects of Municipal Tax Credits
Abstract. This paper analyzes a specific municipal tax credit program that has been passed by the City of Winnipeg, Manitoba, Canada. The program allows 50% of the net private investment in eligible conservation work on a historic building to be designated as a credit against future municipal tax liabilities (property, business and amusement) on the structure and land on which it is situated. The credit is non-refundable and expires after 10 years. This article reviews the economic logic underlying the program from the point of view of an investor. Two approaches are considered, one where the increased expenditure increases the quantity of service flow, the other where it results in an increase in the quality of service flow. It is shown how the investor’s expected tax liability effects the amount of expenditure undertaken. Specifically, the proposal introduces a nonlinear subsidy schedule which limits the total amount of the investor’s tax liability that can be subsidized over the 10 year period. It is demonstrated that the program is quite general and could be used by local governments to encourage spending in other areas, for example, energy conservation or general housing renewal.
|Date of creation:||13 Dec 1999|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ronald C. Fisher & Robert H. Rasche, 1984. "The Incidence and Incentive Effects of Property Tax Credits: Evidence From Michigan," Public Finance Review, , vol. 12(3), pages 291-319, July.
- Oded Palmon & Baron A. Smith, 1998. "New Evidence on Property Tax Capitalization," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 1099-1128, October.
- Man, Joyce Y., 1995. "The Incidence of Differential Commercial Property Taxes: Empirical Evidence," National Tax Journal, National Tax Association, vol. 48(4), pages 479-96, December.
- Anderson, John E., 1993. "State tax credits and land use: Policy analysis of circuit-breaker effects," Resource and Energy Economics, Elsevier, vol. 15(3), pages 295-312, September.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:28949. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.