Tax Incremental Finance (TIF) – a form of financing that has been mainly used in the US – is being deployed in support of a motorway upgrade project in Scotland.
A £2.1 million (€2.5 million; $3.4 million) upgrade at the M9 junction 6 slip road (Glensburgh to Earlsgate Interchange) is the first project to emerge from Falkirk Council’s £67 million TIF scheme.
Work on the slip road – which carries 40,000 vehicles per day – is scheduled to commence in around a week’s time and is expected to last six months. It is being carried out by contractor Wills Bros.
“Thousands of vehicles pass through this slip road and intersection every day with haulage making up a significant proportion of the traffic,” said Dennis Goldie, Falkirk Council’s spokesperson on economic development, in a statement.
He added: “The logistical demands on this area together with the important part it plays in creating better access to attract more investment and development made it a priority project.”
Overall, the Falkirk TIF scheme will be delivered in three phases across the towns of Falkirk and Grangemouth (approximately three miles apart) in the Central Lowlands of Scotland.
The 25-year plan, expected to attract £413 million in private investment, seeks to improve links between the M9 and established industrial areas.
The TIF model has been promoted in Scotland by Scottish Futures Trust, a unit set up by the Scottish government to try and deliver value for money for public sector infrastructure.
Widely used in the US, TIF is a method to use future gains in taxes to subsidise current improvements, which are projected to create the conditions for said gains. The completion of a public or private project often results in an increase in the value of surrounding real estate, which generates additional tax revenue.
Scotland has been a hotbed of innovation for infrastructure finance, having also introduced the Non-Profit Distributing model as an alternative to the UK Private Finance Initiative.