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Item 11: Taxes and social contributions

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

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Item 11: Taxes and social contributions

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

  2. 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

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

  4. 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

  5. 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)

  6. 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)

  7. 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”

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

  9. 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)

  10. 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

  11. 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

  12. 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)

  13. 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)

  14. 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

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