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Business rate retention: growth vs equity

Overman, Henry G. (2011) Business rate retention: growth vs equity. Spatial Economics Research Centre Blog (19 Jul 2011). Website.

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Abstract

The government has launched its consultation on allowing local authorities to retain business rates. The problem: Commercial development imposes costs on local authorities (to provide services to businesses) and to local homeowners, while the benefits are spread more widely. In other words, commercial development generates benefits for others (externalities) that are ignored when making decisions on whether to allow development. This means that local government will tend not to provide enough sites for businesses. The obvious solution (if you believe in decentralised decision making) is to allow local authorities to retain some of their business rates. This will provide better incentives. But these incentives come at a cost - some councils where the business base doesn't grow will be worse off than they would be under a system which redistributes all business rate growth.

Item Type: Online resource (Website)
Official URL: http://spatial-economics.blogspot.co.uk/
Additional Information: © 2011 The Author(s); Online
Divisions: Geography & Environment
Spatial Economics Research Centre
Centre for Economic Performance
What Works Centre
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
H Social Sciences > HT Communities. Classes. Races
J Political Science > JC Political theory
J Political Science > JN Political institutions (Europe) > JN101 Great Britain
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > What Works Centre for Local Economic Growth (WWG)
Collections > LSE Spatial Economics Research Centre Blog
Date Deposited: 29 Jun 2017 13:38
Last Modified: 19 May 2020 23:21
URI: http://eprints.lse.ac.uk/id/eprint/82797

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