On the Methodology for Assessing the Fiscal Effectiveness of Tax Incentives for Private Investors in the Securities Market

Abstract

When identifying the effectiveness of tax incentives for private investors in the securities market, the use of standard effectiveness methods is not possible. At the same time, tax incentives for individual and institutional investors are quite widespread both in the Russian and international practice. The purpose of this study is to develop elements of the methodology and present the author’s technique for assessing the effectiveness of tax incentives for private investors in the securities market. To achieve this goal, the methods of logical, comparative and statistical analysis were used. Methodologically, the work focuses on justifying the circulation of capital due to the provision of tax incentives to private investors. The concept of tax expenditures is also mentioned, the interpretation of the terms “economic effect”, “fiscal effect” and “fiscal effectiveness” in relation to tax incentives is given. The author also deciphered other effects of private investors’ investments in the securities market. The main methodological finding of the author is the use of stock indices in calculating the fiscal effect and fiscal effectiveness. Stock indices are introduced into the methodology for identifying the sectoral structure of investments and distribution of investments in stocks and corporate bonds of particular enterprises. The author’s methodology for assessing the effectiveness of tax incentives for private investors in the securities market consists of ten stages. It is proposed to test the author’s methodology using the example of individual investment accounts and non-government pension funds. The author’s technique has some controversial points, which are also noted in this study.