Trying to corner the local market on both death and taxes, the town of Plymouth is jumping into the cremation business.

Town officials say they expect more and more people to choose cremation over burial in the future and, in true entrepreneurial fashion, they want to be ready to capitalize on the trend. They plan to open a crematory early this year at the town-owned Vine Hill Cemetery just off Route 3.

The crematory will cost $1.3 million to build and $189,000 a year to operate. Losses totaling more than $200,000 are forecasted for the first six years, but after that the crematory is expected to start turning an annual profit that will rise to more than $500,000 by year 15 and $712,000 by year 20.

“It sounds corny, but it’s ‘build it and they will come,’” says Roger Hammond, the head of Plymouth’s Department of Public Works. “We hope to capture all that business coming out of funeral homes on the Cape.”

Most crematories across the country are privately owned, but restrictive Massachusetts laws make it attractive for municipalities to get into the business. State laws require crematories to be located at cemeteries, which many towns own. Laws also limit cremation competition by barring funeral home directors from getting into the business.

Duxbury opened a crematory in 1980 and said it was the first municipality in the country to operate one. Plymouth’s crematory will be the second municipally owned facility in Massachusetts, and the 13th crematory overall in Massachusetts, according to industry listings. The Cremation Association of North America says it doesn’t know how many crematories around the country are municipally owned.

The close proximity of Plymouth and Duxbury, and the lack of competing facilities on the South Shore or on the Cape, means the two towns will compete against each other for cremations. Town officials have made noises about competition already.

“It’s so disgraceful,” says Patricia Pappas, superintendent of the Duxbury Cemetery and Crematory. “It is a business, but it has to be done respectfully and dignified.”

Pappas said she doesn’t believe the opening of the Plymouth crematory will have a significant impact on Duxbury’s well-established business. “We’re really not concerned about it,” she says. “My only concern is that they have someone who can run it efficiently and abide by the laws.”

Duxbury, according to Pappas, handled 3,000 cremations last year, or about 17 percent of the state’s total. The town expects to handle 3,200 cremations this year, Pappas said. At $230 a cremation, gross revenues of the Duxbury crematory are $736,000.

Building a new crematory is an expensive proposition. According to Plymouth planning documents, the crematory itself will cost $1 million and the retorts where bodies are burned will cost about $180,000. Utilities will run about $86,000 a year, and a full-time cremationist (at $40,000 a year) along with two part-time employees will cost about $83,000 a year.

The town is forecasting that it will handle about 500 cremations the first year, double that amount in the second year, and more than 2,000 by year 14. The town plans to charge $250 per cremation initially, but increase the charge by 3 percent a year.

One-third of Massachusetts residents currently choose cremation when they die, slightly below the national average of 35 percent. But the numbers are rising. The Cremation Association of North America is forecasting that the national cremation rate will rise to 39 percent by 2010 and 59 percent by 2025. The Massachusetts rate is expected to keep pace.

Nevada, at just under 70 percent, has the highest cremation rate in the nation, followed closely by Washington, Oregon, Hawaii, and Arizona. Vermont leads the New England region with a cremation rate of 60 percent, while Maine and New Hampshire have rates of 58 and 57 percent, respectively.

While Plymouth officials acknowledge the cremation numbers look promising long term, they say building a crematory isn’t just about the money. They say communities need to recognize that cremation is a sensible public policy approach to an emerging shortage of land for burials.

Hammond says he suspects more cities and towns will consider opening crematories in the future. “It is a public policy issue that cities and towns might have to start thinking about,” he says.