The Instruments for Forecasting Budget Effects of the Tax Stimulation of Innovation Activities

The principles underlying the long-term solvency of the government through creating the necessary preconditions for the innovation-driven development of the national economy are studied. Dynamic series on change in revenues and expenditures of consolidated budget, and budget losses caused by tax exemptions over 2013–2017 in Ukraine are analyzed. It is found that the revenue shortfalls caused by the preferential taxation of company incomes are hardly predictable. A comparative analysis of the structure of budget losses caused by preferential income taxation of companies in 2014–2017 demonstrates the limited character of support for innovation activities at company level. This support could be observed only in the aircraft industry in 2014 and 2017. According to the results of the survey of innovation activities at non-innovating companies of Ukraine, performed in 2012–2014 and 2014–2016, the limited internal funds or private capital and the limited access to government assistance in innovation were significant factors discouraging companies from decisions in favor of innovation projects or innovation activities. The conclusion is made that the tax policy of the government, apart from seeking for stable balance of the budget, needs to create stimuli for capital formation and effective performance of companies and, consequently, the accelerated economic development. Absence of an innovation tax credit in Ukraine and appropriate instruments for assessing its budget effects has dramatic negative consequences for company performance and macroeconomic competitiveness.    Econometric models for tax stimulation of innovation activities at company level are constructed, enabling to select approaches to the innovation tax credit policy and the tax credit intensity, in order to enhance the potential of the national economy to develop by innovation factors. Considering the real budget capacities in Ukraine, the results of computations of budget effects of innovation tax credit (by the first or the second proposed model and by the given alternative options of tax credit amounts) can be used in selecting options of tax stimulation of innovation activities of companies.