Cyrenne, Philippe (1999): On the Incentive Effects of Municipal Tax Credits.
Download (204kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||On the Incentive Effects of Municipal Tax Credits|
|Keywords:||Municipal Tax Credits|
|Subjects:||H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H70 - General
H - Public Economics > H0 - General
H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
|Depositing User:||Philippe Cyrenne|
|Date Deposited:||26. Feb 2011 20:24|
|Last Modified:||02. Jan 2016 11:23|
Anderson, John E. (1993) “State Tax Credits and Land Use: Policy Analysis of Circuit-Breaker Effects” Resource and Energy Economics, 15, 295-312.
Beaumont, Constance E. (1996) Smart States, Better Communities, Washington, D.C.: National Trust for Historic Preservation.
Cyrenne, Philippe and Robert Fenton (1997) “An Examination of the Heritage Tax Credit Proposal in the City of Winnipeg.” Technical Report.
Feigenbaum, Susan and Thomas Jenkinson (1984) “Government Incentives for Historic Preservation” National Tax Journal, 37(1), 113-119.
Fisher, Ronald C. and Robert Rasche (1984) “Incidence and Incentive Effects of Property Tax Credits: Evidence from Michigan” Public Finance Quarterly, 12 (3), 291-319.
Heritage Support: Policy and Programs, A Report on Proposed Municipal Initiatives to Promote Retention and the Use of Heritage Properties in the City of Winnipeg, July 29, 1992.
Law and Public Policy Department, National Trust for Historic Preservation, 1999, mimeo.
Lyon, Deborah and Robert Fenton (1984) “The Development of Downtown Winnipeg: Historical Perspectives on Decline and Revitalization” The University of Winnipeg Institute of Urban Studies Report #3.
Man, Joyce Y. (1995) “The Incidence of Differential Commercial Property Taxes: Empirical Evidence” National Tax Journal, 48, 4, 479-496.
Morris, Marya, Innovative Tools for Historical Preservation, American Planning Association, Planning Advisory Service Report Number 438, 1992, 1-41.
Palmon, Oded and Barton A. Smith (1998) “New Evidence on Property Tax Capitalization”, Journal of Political Economy, 106, 5, 1099-1111.
Property Tax Incentives for Downtown Heritage Buildings, City of Victoria A Report prepared for The City of Victoria, British Columbia, by Clayton Research Associates Limited, September 20, 1995.
Robinson, Susan G. “The Effectiveness and Fiscal Impact of Tax Incentives for Historic Preservation” Preservation Forum, 4 (Winter, 1988-89), No. 2, 8-15.
Robinson, Susan and John E. Petersen, Fiscal Incentives for Historic Preservation, Government Finance Research Center of the Government Finance Officers Association, Washington, D.C., January 1989.
State Tax Incentives, Law and Public Policy Department, National Trust for Historic Preservation, Washington D.C., March 3, 1999, mimeo. 22
Wassmer, Robert W. (1994) “Can Local Incentives Alter a Metro City’s Economic Development” Urban Studies, 31,8, 1251-1278.