Item 11: Taxes and social contributions ESTP course - ESA 2010 National Accounts Luxembourg, 30 May - 3 June 2016 Eurostat

Distributive transactions Transactions by which Value Added generated by production is distributed to the “factors of production” => Chapter 4 of ESA 2010 distinguishes: Current transfers : Primary distribution of income from production: Labour => Wages (compensation of employees) Capital => Profits (Gross operating surplus) Government =>Taxes on production (less subsidies) Redistribution (or secondary distribution) of income and wealth Capital transfers: redistribution of saving and wealth

Income distribution NATIONAL ECONOMY Primary distribution GOVERNMENT PRODUCERS / ENTERPRISES HOUSEHOLDS Wages Prod. Subsidies Dividends & Interests Prod. Taxes Contributions Benefits Income taxes & Social Security Contributions Social Security Benefits Secondary distribution NATIONAL ECONOMY

List of Distributive Transactions D.1 Compensation of employees D.2 Taxes on production and imports D.3 Subsidies D.4 Property income D.5 Current taxes on income, wealth, etc. D.6 Social contribution and benefits D.7 Other current transfers D.8 Adjustment for the change in pension entitlements D.9 Capital transfers

The notion of Tax Definition of a tax (ESA 2010 para 4.14 & 4.77): “compulsory, unrequited payments, in cash or in kind which are levied by general government, by the institutions of the EU or by the rest of the world” ESA divides taxes into 3 categories: Taxes on production and imports (D.2) Taxes on income and wealth (D.5) Taxes on capital (included in D.9)

Taxes on production and imports Two basic kinds: Taxes on products (D.21) VAT (or VAT like) Taxes and duties on Imports Excise Duties, other taxes Other taxes on production (D.29)

Subsidies (D.3) Definition in ESA 2010 (para 4.30): “current unrequited payments which general government or the institutions of the European Union make to resident producers”

Subsidies - categories Like taxes, subsidies are divided into: subsidies on products (D.31) other subsidies on production (D.39) Examples of subsidies?

Taxes on income and wealth (D.5) Two basic kinds: Taxes on income (D.51) Incomes (of HH, NPIs and entrepreneurs) Profits (of corporations) Capital gains (tax on holding gains) Lottery or gambling (winners only!) Other current taxes (D.59)

Taxes: Borderline cases Taxes on products or production? Taxes or social contributions? Taxes or sales of services? local taxes and financing of local services tolls and fees case of licenses

Accounting Rules Valuation Timing - “liability to pay” What about taxes never collected ? => 3 possibilities depending on sources: assessments with adjustment by coefficient: with capital transfer (D.995) with no capital transfer cash receipt with time-adjusted series

Social contributions and benefits Schemes for social protection List of needs that might give rise to benefits (ESA 2010 para 4.84) In cash or in kind (including transfer of non-market output) All Contributions (employee, employer; imputed)

Social transfers in ESA 2010 3 categories of social transfers: Net social contributions (D.61), of which: Employers' actual social contributions (D.611) Employers' imputed social contributions (D.612) Households' actual social contributions (D.613) Households' social contribution supplements (D.614) Social insurance scheme service charges (D.61SC) Social benefits, not in kind (D.62) Social transfers in kind (D.63)

EU Institutions Taxes Taxes collected by countries on behalf of EUI receipts from the common agricultural policy monetary compensatory amounts levied on exports and imports sugar production levies and the tax on iso-glucose customs duties levied on the basis of the Integrated Tariff of the European Union(Taric) VAT and GNI-based third and fourth EU own resources based on the levels of their VAT base and their GNI Not part of D.2, but D.76