Implicit tax rates. 22 nd Statistical Days, Radenci, Peter Štemberger. National accounts SURS

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1 22 nd Statistical Days, Radenci, 2012 Peter Štemberger National accounts SURS

2 Tax burden Taxes and social contributions are the main source of general government revenue. Slovenia, along with the EU, is a high tax area. In 2011 fiscal revenue in Slovenia amounted to 37.3% of GDP. Picture: 2

3 Tax split and tax indicators Taxes and social contributions can be split to: direct and indirect taxes taxes by economic function Tax indicators can be calculated as: ratios of total taxes and social contributions ratios of GDP implicit tax rates 3

4 Taxes by economic function Assumption that each tax may be attributed to a single economic function. There are cases where a tax is related to multiple economic functions and needs to be broken down to a single economic function. Taxes by economic function Consumption Labour Capital 4

5 Taxes by economic function (cont.) Taxes on consumption include taxes on transactions between producers and final consumers (mainly VAT and excise duties). Taxes on labour are divided among employed and unemployed labour. Employed labour: mainly personal income tax and compulsory social security contributions. Unemployed labour: part of personal income tax and compulsory social security contributions of self and non-employed are the main components. Taxes on capital include capital and business income taxes, and taxes on stocks of capital. Capital and business income: mainly corporate income tax, personal income tax and social security contributions by self-employed persons. Taxes on stocks of capital: mainly taxes on land, buildings and other structures and taxes on business and professional licenses. 5

6 What are implicit tax rates? They are indicators that measure actual or effective tax burden for each economic function (consumption, labour, capital). How are implicit tax rates calculated? They are calculated as the ratio of total revenue from taxes and social contributions by economic function and a potential tax base. 6

7 Implicit tax rate on consumption It is the ratio of taxes on consumption and final consumption expenditure of household on the economic territory. Implicit tax rate on consumption 23.0% VAT 13.8% Energy 4.7% Alcohol and tobacco 2.4% Residual 2.1% Source: SURS, Slovenia,

8 Implicit tax rate on labour It is calculated on employed labour only; it is a ratio of taxes on employed labour and a sum of compensation of employees, wage bill and payroll taxes. Implicit tax rate on labour Employed labour 35.1% Unemployed labour Source: SURS, Slovenia,

9 Implicit tax rate on capital It is a ratio of taxes on capital and individual items of national accounts (operating surplus, mixed income, interest, dividends, etc. of individual sectors see paper for details). Implicit tax rate on capital 20.5% Capital and business income 15.8% Corporate income 19.7% Capital and business income of households and self-employed 12.1% 9

10 Comparison between implicit tax rate on consumption and taxes on consumption in % GDP, Slovenia % % GDP 24,5 14,4 14,2 24,0 14,0 13,8 23,5 13,6 23,0 22,5 13,4 13,2 13,0 12,8 22, ,6 Implicit tax rate on consumption Taxes on cunsumption in % GDP Source: SURS 10

11 Comparison between implicit tax rate on employed labour and taxes on employed labour in % GDP, Slovenia % 38,5 % GDP 20,5 37,5 20,0 36,5 35,5 34,5 33,5 19,5 19,0 18,5 18,0 17,5 32, ,0 Implicit tax rate on employed labour Taxes on employed labour in % GDP Source: SURS 11

12 Comparison between implicit tax rate on capital and taxes on capital in % GDP, Slovenia % 30,0 % GDP 6,0 25,0 5,0 20,0 4,0 3,0 15,0 2,0 10,0 1,0 5, Implicit tax rate on capital Taxes on capital in % GDP 0,0 Source: SURS 12

13 International comparison Slovenia vs. EU27, 2010 Implicit tax rate on capital* Implicit tax rate on employed labour Implicit tax rate on consumption EU Slovenia % Source: SURS, Eurostat * Implicit tax rate on capital is calculated for EU17 due to the lack in NA data of some mebmer states 13

14 Taxes in % GDP International comparison Slovenia vs. EU27, 2010 Taxes on capital Taxes on employed labour Taxes on consumption EU Slovenia % GDP Source: SURS, Eurostat 14

15 Concluding remarks Tax indicators in % GDP give limited information regarding the extent of the tax base. do not suffer from this deficiency as they are calculated as the ratio of total fiscal revenue and a potential tax base. Thank you for your attention! peter.stemberger@gov.si Picture: allenkleinedeters.wordpress.com 15

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