Question

An urban governance tool to mobilize financial resources by permitting additional FAR over and above the prescribed FAR by imposing a charge or fee for the same is known as

• A. Betterment Levy.
• B. Impact Fee.
• C. Land Value Increment Tax.
• D. Floor Area Incentive Tax.

Hint:

Floor Area Incentive Tax (FAIT) is a useful tool for urban governance, enabling cities to accommodate growth while funding infrastructure development.

Answer 1

The Correct Option is C

The Floor Area Incentive Tax (FAIT) is a tool used in urban governance to encourage the development of additional Floor Area Ratio (FAR) by permitting additional built-up area beyond the standard FAR. The government imposes a fee for the additional FAR, which is then used to generate financial resources for urban infrastructure development. This tool is important because it helps cities accommodate growing populations and increase urban density without overburdening the infrastructure.
Why is FAIT the correct answer?
The Floor Area Incentive Tax (FAIT) directly relates to increasing FAR by charging a fee for the additional built-up area, thereby mobilizing funds for urban development.
Why are the other options incorrect?
- (A) Betterment Levy: This levy is usually imposed on properties benefiting from public improvements (such as infrastructure) but does not directly relate to FAR. Betterment levy focuses on land value increase due to public investments.
- (B) Impact Fee: This is a general charge on new developments to cover the cost of infrastructure improvements, but it is not directly tied to increasing FAR. It is more of a regulatory tool to offset the impact of new developments on public services.
- (C) Land Value Increment Tax: This tax is based on the increase in land value due to public interventions but does not directly address FAR or the imposition of charges for additional built-up space.
Thus, Option (D), Floor Area Incentive Tax, is the correct choice as it specifically pertains to charging fees for additional FAR.