‘Dear Prudence’: An overview of Tax Increment Financing

Abstract

This paper looks at the use of Tax Increment Financing (TIF) as a tool for levering regeneration and renewal within a wider policy framework. The paper introduces TIF in an era of low economic growth, while finance is both straitened and increasingly provided with an emphasis on the ‘local’. The study then gives an overview of key US literature on TIF for regeneration and renewal. Using interviewees working with TIF in the USA and UK, insight is gained for the introduction of TIF into the UK. Key TIF policy considerations and explanation are put forward, given an introduction of TIF into the UK. In addition, there is a question ‘check-list’ of concerns if a TIF project is proposed. It is argued that TIF should in the first instance be reserved for regeneration and renewal, and that if TIF is selected, it can be a powerful tool as long as a prudential approach is taken.