Fulvia Cerroni - Viviana De Giorgi (Istat)

1. The Tax Authority Source as an example of the use of an administrative source as a statistical one Session 11: Use of administrative data in the statistical system 15 October 2008 Fulvia Cerroni - Viviana De Giorgi (Istat)

2. The Tax Authority Source as an example of the use of an administrative source as a statistical one Agenda Part 1 – Introduction to the Tax Authority Source (Sector Studies), background and motivations. Part 2 – The statistical criteria for quality: quality evaluation of a source and Sector Studies’ key points Part 3 – The criteria applied to Sector Studies: the quality assessment Conclusions and further developments References 15 October 2008

3. The Tax Authority Source as an example of the use of an administrative source as a statistical one Agenda Part 1 – Introduction to the Tax Authority Source (Sector Studies), background and motivations. Part 2 – The statistical criteria for quality: quality evaluation of a source and Sector Studies’ key points Part 3 – The criteria applied to Sector Studies: the quality assessment Conclusions and further developments References 15 October 2008

4. The Tax Authority Source as an example of the use of an administrative source as a statistical one Background and motivations Part 1 • use of administrative sources in place of or together with statistical surveys • applying the guidelines and concepts of quality also to administrative data in order to use them as statistical one • wider use of administrative source in official statistics • reducing the statistical burden • fiscal data assessment for different uses • Sector Studies gather much more information on small and medium-sized enterprises than other available surveys • the Sector Studies’ database is available since the taxation year 2001 15 October 2008

5. The Tax Authority Source as an example of the use of an administrative source as a statistical one Sector Studies’ characteristics Part 1 • they are a survey instituted by the Italian Tax Authority in 1996 for evaluating the capacity of enterprises to produce income and knowing whether they pay taxes • questionnaire consisting of questions on accounting data, occupation, structural and specific aspects of the business activity • reference population: about 3 million small and medium-sized enterprises • enterprises liable to Sector Studies: industrial, commercial and manufacturing income owners and VAT number proprietors for specific sectors of activity, though there are some exclusion and non-enforceability principles • more than 200 different questionnaires, each of them for homogeneous groups of enterprises • all enterprises have in common at least the accounting table, composed of more than 35 numerical questions, which is similar to the economic account of a balance sheet 15 October 2008

6. The Tax Authority Source as an example of the use of an administrative source as a statistical one Agenda Part 1 – Introduction to the Tax Authority Source (Sector Studies), background and motivations. Part 2 – The statistical criteria for quality: quality evaluation of a source and Sector Studies’ key points Part 3 – The criteria applied to Sector Studies: the quality assessment Conclusions and further developments References 15 October 2008

7. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality evaluation of a source: statistical criteria Part 2 • Standard quality indicator (Statistics Canada) • Relevance • Accuracy • Timeliness and punctuality • Accessibility and clarity • Comparability • Coherence • Most of these principles are defined for censuses and sample surveys, though they can be applied also to the processing of administrative records • Different interpretation and indicators can be applied to the same concept. 15 October 2008

8. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality evaluation of a source: Sector Studies' key points • collaborative climate with the Tax Authority’s experts and a well understanding of the context of Sector Studies (legislation, objectives and needs) • documentation of the source’s processing in order to use it as a statistical one • continuous check of the level of quality (definition, coverage, frequencies and other attributes) • presence of the fiscal code for matching with other sources • presence in Istat of the small and medium enterprise sample survey to take as benchmark source • availability of an up-to-date Italian business register as a reference population • though: • biases due to the fiscal purpose of the source • liability for privacy and statistical secret • no control on the production process at the Tax Authority • analysis of the only section of accounting data • non-complete use of this source Part 2 15 October 2008

9. The Tax Authority Source as an example of the use of an administrative source as a statistical one Agenda Part 1 – Introduction to the Tax Authority Source (Sector Studies), background and motivations. Part 2 – The statistical criteria for quality: quality evaluation of a source and Sector Studies’ key points Part 3 – The criteria applied to Sector Studies: the quality assessment Conclusions and further developments References 15 October 2008

10. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: relevance • An administrative archive is relevant to the needs of the potential users if it contains relevant units, relevant variables, relevant definitions and relevant classifications, that is they are able to reflect user needs. • the units of Sector Studies are relevant as they concern the small and medium sized enterprise, that are the milestone of the Italian Economy • the accounting variables and definitions of Sector Studies are relevant once they have been assessed as statistical ones (Bernardi et al., 2008) • the classifications of Sector Studies are relevant since they are similar to the statistical ones • possibility to work out a brief questionnaire to be given to the actual users of data (National System of Accounts Department), to having traces of the usability of data Part 3 Sector Studies are relevant to the main estimations of Italian National System of Accounts and also to the replacement/integration of the small and medium-sized enterprise sample survey data 15 October 2008

11. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: accuracy • Accuracy indicates the potentiality of an instrument of correctly reflecting reality and it is considered to be of great importance for the quality of a statistical source. • We measured the accuracy of Sector Studies through checking whether they identify the population of units belonging to the universe of small and medium-sized enterprises in a picture as near as possible to the real one in terms of frequency of enterprises, persons employed and turnover (year 2005) Part 3 Sector Studies data are enough accurate in reflecting the Italian Business Register Population 15 October 2008

12. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: timeliness and puncuality • Punctuality refers to the time lag between the release date of data and the target date when it should have been delivered [Eurostat, 2003a] • for the moment, there is no possibility to calculate any indicator of punctuality • Timeliness of information reflects the length of time between its availability and the event it describes [Eurostat, 2003a]. Part 3 Timeliness is about 18 month after the end of the taxation period 15 October 2008

13. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: accessibility and clarity Part 3 • Clarity and accessibility concern how easily users can access the information held on the SS archive. • For the moment, the possibility to physically access SS data and view elementary records is allowed only to the administrative archive department, which holds the SS source, and to the NSA departments only for a limited set of records. • Meta-information is provided to NSA researchers and to all other potential internal users through documents and papers. • For external users we disseminate only the results of specific studies and at the end of the experimental use in the estimations of the NSA indicators Istat will disseminate the outcomes. Accessibility and clarity are covered by internal users’ opportunity to access data and meta-documentation 15 October 2008

14. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: comparability Part 3 • Comparability aims at measuring the impact of differences in applied statistical concepts and measurement procedures when statistics are compared between geographical areas, non geographical domains, or over time [Eurostat, 2003b] • comparability over time is possible, as all changes in legislation, target population and manual instructions try to respect the core of the questionnaire. The collaborative climate between Istat and the Tax Authority is very important. • a set of variables which have no modification in the reference period • a set of variables whose modification occurred only to clarify the compiling instructions • geographical comparability is not possible, as neither there is a similar European survey nor a norm that can be compared Comparability over time is guaranteed by a collaboration between Istat and The Italian Tax Authority 15 October 2008

15. The Tax Authority Source as an example of the use of an administrative source as a statistical one Quality assessment: coherence Part 3 Coherence of statistics indicates their adequacy to be reliably combined in different ways and various uses. It focuses on the joint use of statistics produced for different primary purposes [Eurostat, 2003a] The field we chose to assess is the coherence between the primary use and the secondary use we want to apply, in order to listing discrepancies and make the source as coherent as possible primary use: fiscal purpose secondary uses: • main estimations of Italian National System of Accounts (current experience) •small and medium-sized enterprise survey data replacement and integration (future testing, now they are only used for comparisons) 15 October 2008

16. The Tax Authority Source as an example of the use of an administrative source as a statistical one Coherence assessment: secondary uses • first column: secondary uses • second column: statistics to be assessed • remaining columns: list of factors that define the properties the statistics should satisfy (any other one can be added to the heading list) Part 3 15 October 2008

17. The Tax Authority Source as an example of the use of an administrative source as a statistical one Coherence assessment: indicators • A1, A2: single indicator for each factor (rows) and each specific statistics (columns) • A3: global indicator for the secondary uses Part 3 Sector Studies are enough coherent to the secondary uses identified for the time being 15 October 2008

18. The Tax Authority Source as an example of the use of an administrative source as a statistical one Conclusions • Sector Studies are relevant to the main estimations of Italian System of Accounts and also to replacement/integration of the small and medium-sized enterprise sample survey data • Sector Studies data are enough accurate in reflecting the Italian Business Register Population • Timeliness is about 18 month after the end of the taxation period. • Accessibility and clarity are covered by internal users’ opportunity to access data and meta-documentation • Comparability over time is guaranteed by a collaboration between Istat and The Italian Tax Authority • Sector Studies are enough coherent to the secondary uses identified for the time being • The SS archive appears to have a very good level of statistical quality, in terms of relevance, timeliness, accessibility and comparability over time. As regards coherence and accuracy they are enough appreciable. 15 October 2008

19. The Tax Authority Source as an example of the use of an administrative source as a statistical one Further developments • Assessing the Sector Studies’ source statistical quality for survey frame • Assessing the Sector Studies’ source statistical quality for replacing data collection uses • Future uses in editing and imputation of the Italian Business Register variables • Essential requisites • permanent checks of definitions, concepts, coverage, frequency, timeliness and other attributes is done in order to keep under control, over time, legal or economic changes that can distort time series • keeping active the collaboration between Istat and the Tax Authority, so assuring that the incoming data quality keeps less or more the same, in spite of changes 15 October 2008

20. The Tax Authority Source as an example of the use of an administrative source as a statistical one References • Bernardi A., Cerroni F., De Giorgi V. (2008a).A methodological process for assessing variables coming from administrative sources: an application to the Tax Authority Source (Sector Studies). Contributed Paper of European Conference on Statistical Quality in Official Statistics. Rome 8-11 July 2008. • Bernardi A., Cerroni F., De Giorgi V. (2008b). Validazione delle unità di una fonte amministrativa. Schema teorico ed applicazione alla fonte Studi di Settore. Istat, internal document (Italian). Rome, July 2008. • Eurostat (2003a). Definition of quality in statistics. Document n° Eurostat/A4/Quality/ 03/General/Definition. • Eurostat (2003b). Standard Quality Report. Document n° Eurostat/A4/Quality/03/ General/Standard Report. Luxembourg, May 2005. • Eurostat (2005), Quality in Statistics. Doc. n° ESTAT/02/Quality/2005/9/Quality Indicators. Luxembourg, May 2005. • Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies. • Statistics Canada (2003), Statistics Canada Quality Guidelines. Fourth Edition. October 2003. 15 October 2008

21. Thank you for your attention For further information: Fulvia Cerroni: cerroni@istat.it Viviana De Giorgi: degiorgi@istat.it 15 October 2008