From the Guardian:
Boris Johnson today called on the government to allow London to adopt a US-style scheme to raise money for projects, increasing his financial independence from the government.
In a report published today, the Conservative London mayor and Merrick Cockell, the Tory leader of the umbrella group for London councils, included the idea of tax increment financing (Tif) to help fund projects in the capital during the economic downturn.
All completely true. But what is tax increment financing? Does it speak English? Can it play the violin? Luckily, Tony Travers of the LSE was sitting in front of me at this morning's press conference. He said the following into my electronic recording device:
"The way tax increment finance works is that the public sector will plan and deliver a big project and then uses the tax yield from that project to pay off the debt that was incurred in building the project in the first place."
So now you know. It already happens in Chicago. But could it happen here? There are obstacles. The Treasury, even under a Tory government, might not be keen and, as Tony explained, "it's difficult to capture the tax yield because in Britain at present all the tax yield goes to the Treasury, except for the Council Tax. There would have to be a way of the Treasury allowing the public authority to capture at least part of the tax yield."
You know, I'd love to stick around and talk about this stuff all day. Alas, time marches on. Read the report, entitled Investing for Recovery, right here.
