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US infrastructure must face ‘economic truth’

new york skyline 2015

US President Donald Trump’s plan to find his $1 trillion (£810bn) infrastructure plan through tax credits could leave individual states with projects that they are unable to afford, an industry expert has warned.

Trump’s aides, billionaire Wilbur Ross and university professor Peter Navarro, are said to drawing up a plan for the US government to give £108bn of tax credits to the private sector to help fund infrastructure. This would lead to an influx of private money which could cover 82% of the cost of the new projects.

But there is concern that this will only attract private investors to the best projects.

“The proposals appear to be solely weighted to the investor and contractor side of the industry. They do not address the single biggest impediment on projects coming to market – affordability,” said Atkins Acuity managing director for infrastructure finance Roddy Adams. “States and municipalities simply may not have the resources to repay the investment over a project’s life. No amount of financial alchemy can mask this economic truth.”

Adams said that the tax incentives should instead be used to help affordability and should be available for longer than the constructing period to reduce any financing risk.

“One other worrying aspect of the use of tax credits would be their term/period. If they are only available for the construction period, will that create a very real refinancing risk? This does not appear to have been thought through,” said Adams.

 

 

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