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I've noticed that scaring off dirty industry with high taxes does not appear to have any negative impact on my city's growth or economy. Ideally, I would only have high-tech in my city, so that I may safely mix industry with residential to reduce commute times, but when I proceed to raise manufacturing taxes, however, the game warns me that this spells doom for my city.

Is this true? Is there some reason manufacturing jobs are essential to my city, and if so, is there some way to make sure manufacturing buildings don't mix with high-tech buildings?

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No, not really. The main issue you need to look at here is whether your city has sufficient demand for high tech industries to replace the tax revenue from polluting industries. Hi-tech demand is strongly predicated on education, so make sure the education level and the RCI indices for Hi-tech are high. If you really want to make sure the Sims who can't work in Hi-tech jobs still have jobs, start a new small neighbouring city and fill it with heavy industry tiles. One of the magic of SimCity is that each city is wrapped in an air tight bubble that doesn't allow pollution to waft over from city to city.

To actually get rid of polluting industries and transition to Hi-tech, you can either demolish them all at once, or slowly get rid of them section by section. Hi-tech industries cannot live in the same area as polluting industries, including polluting power plants. This is because Hi-tech industries have calculate desirability in a manner similar to residential areas, and are thus extremely sensitive to pollution. If you're not averse to installing mods, the Air Purification Plant can make your life much easier.

To get rid of polluting industries, slowly jack taxes up to 13% to slow down and stop growth, then to 18-20% when you're ready to get rid of them entirely. Raise taxes for $I first, then $$I, to keep the disruption on tax revenue to a minimum. You can also grow new Hi-tech zones by zoning medium density industries around residential areas and filling them with trees to minimize pollution. There is no way you can actually stop dirty and manufacturing industries from appearing in these zones - you just have to make sure your tax rates are sufficiently high and the desirability and demand for Hi-tech are higher than that for dirty industries. You can manually prune these areas of polluting factories, but that's not a policy that is sustainable in the long run.

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As a side note, will the game keep complaining after all dirty industry has left the city? (Or low-wealth residential/commercial for that matter; it still guilts me into a 9/9/9 tax rate for those tax groups.) –  oKtosiTe Mar 9 '13 at 14:52
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