Question

Ethics Issues

Should municipalities offer monetary incentives to induce firms to relocate to their areas?

Answer 1

Yes, the municipalities can provide various incentive programs like special property tax incentives program oriented towards the redevelopment of its central business district. All incentive programs are established by ordinance.

Municipalities adopt various strategies and programs that allow municipalities to engage aggressively in economic development.

Municipalities economic development objectives is to increase the tax base, create jobs and stimulate the local economy by encouraging new business activities and expanding existing business activities. These business activities result in an infusion of capital, the inflow of money from the purchase of goods and services, increased payroll dollars circulating in the local economy, and an expanded tax and fee base for the community. The added diversity of the business mix also makes the community more attractive to residential and economic development prospects

The municipality may structure incentives granted to eligible projects in two ways, as upfront loans or grants or grants paid after certain conditions are met. There are a lot of benefits for municipalities having a lot of good businesses so the municipalities may induce or attract businesses to function in its area.