PFTAC GDP Compilation and Forecasting Workshop Use of administrative data Suva, Fiji October 17-21, 2016

Session Outline Sources Challenges Focus on tax data

Administrative Data Taxation records Imports and exports data Company tax Self employed tax Taxes on salaries and wages Gross revenue tax Imports and exports data Customs Regulatory data on banking and other industries annual and quarterly finance/insurance returns to central bank If no CB, financial services commission? Different names, FIC, Palau business licences (BR) returns to business registrar, Palau? AG? number of taxis, buses, trucks building permits (wpip)

Administrative Data cont. Government Accounts Can be tardy but monthly expenditure data, wages, are compiled Business accounts Public enterprises Public companies Social security, national provident fund Wages by industry by month, employment numbers Development project data -- aid management unit Often excluded from Government budget data Trade or business associations – chamber of commerce Knowledge of industry, need to be consulted before surveying Get their backing, know what they can provide...

Administrative Data cont. This is a huge amount of information..... none of it involving a great deal of input from the NSO but it does need to be collected systems set up for receiving it in a timely manner work through management channels as needed it is all easier and cheaper than running a new survey some effort will yield big reward in fact, YOU CAN’T DO NA PROPERLY WITHOUT IT!

Administrative Data – Strengths and Weaknesses Low cost for NSO Coverage sometimes very good Ongoing collection = time series Timeliness Timelier than independent surveys Weaknesses Not always consistent with NA concepts – coverage, classifications, definitions, etc but NSO can assist with this Lack of control of data processes (editing, quality control, changes of rules, etc.) All data need editing

Admin Data - Challenges Obtaining the data, and if so: Timeliness Applying NA classifications Ensuring consistency over time – admin processes or rules change (e.g., tax, customs) KNOW YOUR DATA * Opportunities to assist the admin agency with classifications, database management, feedback on the results... *

Admin Data – Challenges Adjustment to NA concepts Benchmark ratios Usually I/O in constant P, O/S-Output unusual How often to update? What other data to use? What level of detail to adjust?

Admin Data – Tax Tax of Profits/Income affects government revenue so may be good quality, coverage and timeliness depends on timeliness of business accounts/audits depends on accounting standards, government regulations limited to coverage as defined by the tax authorities enterprise level detail only may provide detailed accounts may overstate expenses, understate income all of which you will find in survey data!!

Admin Data – Tax Value Added Tax Timely – quarterly/monthly collected under tax act , where penalties really do apply Formal sector Capital purchases and sales included Capital purchases sometimes separated Gives a direct VA indicator cash only May overstate expenses, understate income self policing except for end user sales Provides Business Register data!

Value Added Tax Countries will vary on data specifics Data on monthly return potentially available Namibia: Sales split into capital goods and other Local purchases Local capital purchases ? Imported purchases Imported capital purchases ? ? = popular idea but tends not to work

Value Added Tax Vanuatu e.g. Total Sales & Income including VAT Less Zero-rated supplies divide by 9 = VAT charged, plus other if any Total purchases VAT inclusive, divide by 9 = Vat paid on local G&S VAT paid on imported supplies Difference VAT to pay.... Handout...

Revenue/profit tax Annual business tax returns contain more detailed accounting information Still effectively provide a production account But more info on capital items in most cases Also more info on employee-related expenditures that may be income in kind Adopt a detailed algorithm to transform annual tax returns into output, IC and GVA Use the results by industry to benchmark quarterly VAT/GST returns

Example of VAT form - Tonga

Example of income tax form - Tonga

Example of income tax form - Tonga

Example of income tax form - Tonga

Example of income tax form - Tonga

Exercise Look at the sample company account provided Use the knowledge you’ve gained to transform the items listed into Output IC GVA (as a residual of the above) This involves hard choices but practice helps!