On the incentive effects of municipal tax credits

This article analytes a specific municipal tar credit program that has been adopted 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 nonrefundable tar credit against future municipal tar liabilities (property, business, amusement) on the structure and land on which it is situated. In the article, the authors show how an investor's expected tar liability affects the amount of expenditure undertaken. Specifically, the proposal introduces a nonlinear subsidy schedule that limits the total amount an investor's tar liability can be reduced. The authors conclude that the program is quite general and can be used by local governments to encourage spending in other areas,for example, energy conservation or general housing renewal.