Page 124 - Low Carbon Development in China and India
P. 124
the development and expansion of cities. We believe that by adjusting 2.2
the rates of these taxes, we can effectively inhibit over-expansion of the
cities on the one hand, and increase the tax revenue on the other hand,
thus providing additional funds for the local governments based on
the existing tax revenue distribution ratio between central and local
governments.
Next, the tax revenue of the local governments are mainly those
related to the use and sale of land, including the housing property tax,
farmland occupation tax, land value increment tax, and urban land use
tax. The adjustment of these tax rates can also lead to the inhibition of
over-expansion of the cities, protection of the farmland and increase
in the local governments’ income. Meanwhile, the emission-based
vehicle and vessel taxes have a direct bearing on the cost of vehicle
use, and therefore, their tax rate adjustments can bring a considerable
amount of additional revenue to the local governments, while curbing
the pollution resulting from vehicle exhausts and promoting energy
conservation and emission reduction.
Internationally, a majority of the Organization for Economic
Cooperation and Development (OECD) countries derive their local
governments’ tax revenues from property tax. Property tax has an
impact on land use, urban plot ratio, and the speed of urban expansion.
Hence, it has an overall impact on the planning of low carbon cities.
However, the tax rate, tax base and target of the property tax vary
from country to country. For example, France introduced, in 2010, a tax
policy which imposed a certain low density tax on building projects
whose plot ratios were lower than the statutory level; the City of
Austin in the State of Texas, USA, levied tax on motor vehicles for their
use of public facilities based on the assessed per-household mileage of
the vehicles, which played an effective role in preventing low density
of the city.
The low carbon city development financing, related to the property
tax, also includes the tax incremental financing (TIF). TIF is basically
applied to promote the development of an underdeveloped area in
a city or an urban area which is in need of large-scale renovation. It
works by first raising the overall value of a designated area through
investment and then earmarking the income from the property tax,
so generated, to cover the preliminary investment of investors in such
area. For example, Chicago earmarked 10 per cent of its property
tax revenue for TIF, which covers 25 per cent of the city’s territory.
However, public opinion on the effect of TIF is divided. Some believe
that the TIF fund may be used for already developed urban areas, and
therefore, exacerbate the imbalance of development in cities.
Chapter 2 Innovative Financing for Low Carbon Development 89
the rates of these taxes, we can effectively inhibit over-expansion of the
cities on the one hand, and increase the tax revenue on the other hand,
thus providing additional funds for the local governments based on
the existing tax revenue distribution ratio between central and local
governments.
Next, the tax revenue of the local governments are mainly those
related to the use and sale of land, including the housing property tax,
farmland occupation tax, land value increment tax, and urban land use
tax. The adjustment of these tax rates can also lead to the inhibition of
over-expansion of the cities, protection of the farmland and increase
in the local governments’ income. Meanwhile, the emission-based
vehicle and vessel taxes have a direct bearing on the cost of vehicle
use, and therefore, their tax rate adjustments can bring a considerable
amount of additional revenue to the local governments, while curbing
the pollution resulting from vehicle exhausts and promoting energy
conservation and emission reduction.
Internationally, a majority of the Organization for Economic
Cooperation and Development (OECD) countries derive their local
governments’ tax revenues from property tax. Property tax has an
impact on land use, urban plot ratio, and the speed of urban expansion.
Hence, it has an overall impact on the planning of low carbon cities.
However, the tax rate, tax base and target of the property tax vary
from country to country. For example, France introduced, in 2010, a tax
policy which imposed a certain low density tax on building projects
whose plot ratios were lower than the statutory level; the City of
Austin in the State of Texas, USA, levied tax on motor vehicles for their
use of public facilities based on the assessed per-household mileage of
the vehicles, which played an effective role in preventing low density
of the city.
The low carbon city development financing, related to the property
tax, also includes the tax incremental financing (TIF). TIF is basically
applied to promote the development of an underdeveloped area in
a city or an urban area which is in need of large-scale renovation. It
works by first raising the overall value of a designated area through
investment and then earmarking the income from the property tax,
so generated, to cover the preliminary investment of investors in such
area. For example, Chicago earmarked 10 per cent of its property
tax revenue for TIF, which covers 25 per cent of the city’s territory.
However, public opinion on the effect of TIF is divided. Some believe
that the TIF fund may be used for already developed urban areas, and
therefore, exacerbate the imbalance of development in cities.
Chapter 2 Innovative Financing for Low Carbon Development 89
