Tax incentive regimes: models and research methods

Sokolovska, Olena and Sokolovskyi, Dmytro (2014): Tax incentive regimes: models and research methods.

Abstract

Paper deals with problem of effectiveness of tax incentive regimes. Support of priority industries remains currently important for transition economies. At once, such countries more often than developed ones face the imperfection of tax incentive mechanisms. Notably, such problems are common to Ukrainian and Moldavian economies, where the legislative support or its implementation in the area of preferential taxation of innovative enterprises which contribute essentially to sustainable development is absent. The present research aims to improve the efficiency of tax incentive regimes. For this we made a classification of tax incentives by their area of application and also by tax incentive regimes. Those classifications allowed us to single out and to systematize possible local problems, which may be caused by introduction of tax incentives and also to systematize their mechanisms and consequences of their implementation. We considered causes and consequences of failures pending implementation of tax incentives. Methodological background of our research is the systemic approach allowing us to classify and identify links between elements of tax incentive systems and also in order to study individual and mutual behavior of economic agents we used optimization methods and game theory tools. Finally we defined factors of improvement of efficiency of tax incentive regimes, particularly mechanisms of their implementation and termination. In practice our findings can help to decrease the number of blunders in distribution of tax incentives across priority economic areas, such as innovation projects, green and resource saving technologies etc.

• Item Type: MPRA Paper
• Language: English
• Keywords: tax incentives, transition economies, economic behavior of investors, “principal-agent” model
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; H - Public Economics > H2 - Taxation, Subsidies, and Revenue; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents

References

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