As readers of The MJ will know, tax increment financing (TIF) is a method of funding which uses future gains in tax revenues - for example, business rates - to finance new or improved infrastructure within a defined area or zone. This infrastructure should lead to increased economic activity within the area which will, in turn, generate additional tax. This increase in revenue can be used to pay for the cost of the upfront investment and, hopefully, be sufficient to provide a further gain to the area. TIF is already widely used in other countries, notably the US. For example, the city of Chicago has more than 100 distinct TIF zones to build and repair roads and infrastructure, dean polluted land and put vacant properties back to productive use. To qualify for TIF status in the US, a project must pass what is known as the 'but for' test. Essentially, it must demonstrate that the benefits which are being sought would not be achieved but for the TIF investment.
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