Property tax assessment incentive for green building: energy saving based-model

Abstract

The practice of providing property tax assessment incentives within the green building sector has been empirically documented to encourage the growth of green buildings. However, no definite and uniform basis has been adopted in the development of these incentive models. Additionally, these incentives require local authorities to bear the implementation costs. Therefore, the aim of this paper is to develop property tax assessment incentive models through the evaluation of their effects on the tax revenue of local authorities and the amount of tax imposed on properties for the taxpayers. There are two incentive models developed in this paper, namely the property tax assessment exemption model and the reduction model. Cost-Benefits analysis between the amount of tax assessment increment and the annual energy savings conveyed by the green envelope components were conducted to determine the appropriate percentage of reduction. Through the exemption model, local authorities do not experience any increment on their existing tax revenue, and taxpayers do not have an increased amount of tax imposed on their properties. However, through the reduction model, local authorities do experience a tax increment of $4 to $9 on their existing tax revenue. As for the taxpayers, annual energy savings conveyed by the green envelope components compensate the amount of their tax increment.