Use of Tax Data in the Unified Enterprise Survey (UES)

1. Statistics Canada Statistique Canada Use of Tax Data inthe Unified Enterprise Survey (UES) Workshop on Use of Administrative Data in Economics Statistics Marie Brodeur Moscow November, 2006

2. Overview of the presentation • 1.UES Background • 2.Integrated Approach Principles • 3.Survey Characteristics • 4.Business Register • 5.Sampling • 6.Achievements and Future Directions • 7.Use of Tax Data • 8. Research and development

3. 1. UES Background • Major project to improve provincial statistics (1996) • Reliable Annual Provincial Data for the Allocation of HST Revenues (SNA I-O Tables) • More detailed Industry & Commodity data • Creation of Enterprise Statistics Division (ESD) • UES Pilot (RY 1997) -- 7 surveys • Gradual Expansion of Surveys; Covers 65% of GDP

4. 2. Integrated Approach Principles • Use of Single, Unduplicated Frame -- the BR • Expanded coverage • Common Sample Design Methodology • Integrated Questionnaire -- common / simple language; harmonized concepts / variables • Centralized Data Collection at the Statistical Establishment level

5. 2. Integrated Approach Principles (continued) • Common Generic Processing Systems and Methods • Centralized Warehouse • Head Office Survey • Maximum Use of Tax Data • Annual Profiling of Large Enterprises • Enterprise Portfolio Managers

6. 3. Survey Characteristics • Separate Enterprise & Establishment Surveys • Over 50 Establishment Surveys • Over 55,000 collection entities representing about 68,000 establishments (17K replaced by tax for RY 2005) • Centralized Collection -- $3.5 million budget • Smallest businesses estimated through tax

7. 4. Business Register (BR) • BR covers all sectors • Incorporated and unincorporated businesses • Complex and simple enterprises • Structure • Legal • Operational • Statistical (Enterprise & Establishment) • Updated with Administrative Data

8. 5. Sampling • Stratified Random Sample • Industry (NAICS 4) • Province • Size • 1 Take-all stratum • 2 Take-some strata (50% of units replaced by tax) • Take-none strata (under Royce-Maranda thresholds)

9. Stratification in One Look Cell Take-all Take-some 2 Must take units Samplingrevenue • Royce-Maranda (RM) Exclusion Thresholds: • To reduce response burden on small enterprises Take-some 1 Take-none

10. Sampling Process Survey Universe File (2M businesses) BR (2.3M businesses) Tax Est’d (1.4M) Sample Control File (2M businesses) 55K CEs UES Sample (70K businesses) Survey Interface File 38K CEs / Questionnaires Tax Replacements 17K CEs

11. 6. Achievements • Timeliness • Centralized Processing Systems and Databases • Response Burden • Use of Tax Data

12. 6a. Timeliness • Very problematic during start-up years • Many processing systems in development • Problems with questionnaires • Task force created in 2001 • Target: 15 months after reference year • Since RY 2003, all surveys between 12-15 month period

13. 6b. Centralized Processing Systems and Databases • Develop centralized systems • Move away from stand-alone • Single point of access for security • Integrated Questionnaire Metadata System • Edit and imputation • Allocation and Estimation • Data Warehouse

14. Centralized Collection Pre-Contact (17K Businesses) Score Function Mailout (38K CEs) Edit / Verification (BLAISE) Receipt (75% target) “Clean” Records Capture / Imaging Delinquent Follow-Up

15. Post-Collection Processing “Clean” Records Tax Data Central Data Store Pre-Grooming USTART Edit & Imputation Subject Matter Review & Correction Tool Allocation / Estimation

16. 7. Use of Tax data • Significant process since 1997 • Strategic Streamlining Initiative • Result • Almost 65% of units replaced by tax data • Impact of 27% in the total estimate

17. Streamlining Initiatives at STC • Announced in 2002 • Objectives • Maintaining quality • Create efficiencies • Enhance work flows • Identify trade-offs • Expand the use of tax data for survey replacement

18. T1\T2 Project • Objective is to substitute 50% of simple establishments. • Direct Data Replacement for annual surveys using • T1(unincorporated) • T2 (incorporated) • Facilitated by the Chart of Accounts (COA).

19. Types of Administrative (Tax) Data From the Canadian Revenue Agency (CRA) • Agreement between CRA and STC • T1 (unincorporated businesses) • T2 (incorporated businesses) • T4 (pay slips) • GST (goods and service tax) • PD7 (payroll deduction accounts)

20. Processing of Tax Data • Edit erroneous reports • Outlier detection • Eliminate duplication • Impute for missing values • Annualize in case of monthly data

21. Stratification in One Look Cell Take-all Take-some 2 Must take units Samplingrevenue • Royce-Maranda (RM) Exclusion Thresholds: • To reduce response burden on small enterprises Take-some 1 Take-none

22. RY2005 Methodology: Tax Replacement T1 T2 Main sample to be surveyed Main sample to be surveyed Not eligible for tax : questionnaire Characteristic survey (some Services surveys) or questionnaire (all other divisions) Tax replaced ROYCE-MARANDA THRESHOLDS T1 Take-None: Sample of e-filers T2 Take-None: Census of General Index of Financial Information (GIFI)

23. UES: Use of Tax Data • Validation (comparison) • Verify dubious collected data against the equivalent tax data record • Imputation • One of the methods used for non-response • Estimation • Below take-none • Direct Data Replacement • Some annual surveys 100% tax (Taxi & Limousines, Survey of Mapping) • Update Business Register • Allocation of survey data ( use tax revenues, salaries and expenses)

24. CHART OF ACCOUNTSWhy does a Bureau of Statistics need one? BUSINESS WORLD Chart of Accounts (COA) BUREAU OF STATISTICS

25. Chart of Accounts Operating Surplus Shipments Value added Outputs Inputs GDP EBIT Sales Gross profit Operating revenue Cost of sales Expenses COLLECTION LINK, BRIDGE, CONCORDANCE DISSIMINATION

26. Expected Benefits of a Chart of Accounts • Standardization in business data collection • Higher survey response • Increase in quality of data • Comparison of data from various sources • Increase efficiency in using administrative data

27. Links to Chart of Accounts CHART OF ACCOUNT Establishment Legal entity Legal entity

28. GST Data • Monthly tax data • Used to replace survey data for monthly surveys • Implemented for manufacturing, services and retail surveys • For RY 2005 used for analytical comparisons for annual Services Surveys

29. Research and Development • Data Integration Project make a more efficient use of tax data • Development of new quality indicators (e.g. Rates, coefficients of variation)