Reference no: EM131888547

Question: As demand for services increase, tax rates and service fees often increase. This results in a slower rate of new development and revenue growth. Discuss a local policy example where this principle applies.

Please explain whether you agree with my classmate response to the above question and why? (A mininum of 125)

CLASSMATE'S POST

The first thing that comes to mind regarding a policy example that results in a slower rate of growth is Tax Increment Financing or TIF. TIF is used to alleviate taxes for developers in housing development. In the small town where I live, local developers utilize tax abatement to build spec houses and sell empty lots within a community. However, because of those tax abatements (and this particular example in my small town) that have been going on for over twenty years, the developer hasn't necessarily expanded the tax base within that development. The various iterations of the council have allowed extensions even if no significant work has been accomplished to finish or lure new home builders within that particular development. This year the developer asked for ANOTHER five year tax extension with no clear plan as to how they are going to finish that development. Unfortunately, the current council allowed the extension to happen again. This slow rate of revenue growth not only affects the revenue sources for the city, but it affects the county and school tax base as well because they are also affected by the abatement. This example of ‘slow rate development' while helpful to the developer and those that have built homes within the TIF area, it should have a completion or end date.