This paper aims to present the theoretical and conceptual framework of a new method in public finance called “participation based tax increment financing (P-TIF)” by combining conventional tax increment financing (TIF) within the Shariah-compliance structure.,This study develops a benchmark model for P-TIF, which offers a participative contract between both lender and borrower. With the help of this model, a financing schema in P-TIF is established by incorporating stochastic modelling. Possible implications and alternative options of application are also explored with a discussion of challenges.,The results mainly indicate that P-TIF promises lenders to be a part of increment from tax earnings, in return for a reduced interest rate. They show how a rise in participation of the lender in a given contract lowers the interest rate. Under the base case scenario, the interest rate is reduced to zero when the participation of the lender in tax increment is set as 50%.,With the feature of being interest-free, P-TIF can be implied also within the Shariah-compliance framework, thanks to the model it is based on. Additionally, as the model in this paper is parametric, it can be applicable to various cases in Islamic finance.,To the best of our knowledge, this is the first paper in the literature in the sense that it provides a conceptual idea and respective model for TIF method within Shariah-compliance framework.

中文翻译：

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基于参与的税收增量融资的基准模型

本文旨在通过将传统的税收增量融资（TIF）结合在伊斯兰教法合规结构中，提出一种公共财政新方法“基于参与的税收增量融资（P-TIF）”的理论和概念框架。 P-TIF的基准模型，它在贷方和借方之间提供了参与性合同。在此模型的帮助下，P-TIF中的融资模式通过合并随机建模而建立。结果还表明，P-TIF承诺放款人将成为税收收入增量的一部分，以换取降低的利率，从而探讨了可能的含义和应用的替代方案。它们显示出贷方对给定合同的参与度增加如何降低利率。在基本情况下，当贷方将税收增加的参与设置为50％时，利率将降低为零。具有免息的特征，P-TIF也可以隐含在伊斯兰教法合规性内框架，这要归功于它所基于的模型。此外，由于本文中的模型是参数化的，因此可以应用于伊斯兰金融中的各种情况。据我们所知，这是文献中的第一篇论文，因为它提供了概念性思想和相应的模型符合伊斯兰教法的TIF方法。