The boundaries of economic feasibility of tax incentives for innovative businesses

Molodchik A. V. and Sevastyanov V. P.
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Molodchik A. V.: Perm National Research Polytechnic University
Sevastyanov V. P.: Perm National Research Polytechnic University

Вестник Пермского университета. Серия: Экономика, 2014, issue 3, 66-73

Abstract: Innovative development of Russia and the region is impossible without well-developed innovation infrastructure, and, in particular without those elements of it that provide financial support to innovative businesses. A special role is played by the public institutions aimed at promoting the innovation activity. The provision of tax incentives for innovative businesses should be considered as the most recent form of the government support. This does not require the State to divert the existing financial resources but just not to take out the funds earned by the businesses. The article shows that there are objectively determined boundaries of the economic feasibility of tax privilege for income tax for innovative businesses, whereby a balance of state interests and needs of businesses that implement innovative development programs is provided. The authors have developed a method of rapid analysis of innovative programs of businesses, focused on practical application, that enables finding economic parameters under which the government expenditure for financial support of businesses is compensated by the increase in payments to the income tax budget from those businesses. This method allows for formation of a normative structure that defines the border lines for Tax Incentives Economic Feasibility for supporting the innovation activities of businesses. These normative values are advisable to lay in the local normative acts that govern activities of government agencies for financial support of businesses implementing the innovative programs. They are easy to use for conducting all sorts of competitions of the innovative businesses as well as for making decisions on the government support of modernization programs of production of industrial corporations.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:scn:006506:15671017

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