Taxes and subsidies on products and imports
10.47
Although essentially limited to transactions involving goods and services, the
integrated system of price and volume indices does not exclude the possibility
of calculating measures of changes in price and volume for certain other
transactions. This possibility exists, in particular, in the case of taxes and
subsidies directly linked to the quantity or value of the goods and services which
are the subject of certain transactions. In the supply and use tables, the
values of these are shown explicitly. By applying the rules described below, it is
possible to obtain price and volume measures for the categories of taxes and
subsidies which are recorded in the goods and services accounts, namely:
10.48
The simplest case is that of taxes which represent a fixed amount per unit of
quantity of the product which is the subject of the transaction. The value of
the revenue from such a tax depends upon:
The breakdown of the value change into its two components presents virtually
no difficulties. The variation in volume is determined by the change in the
quantities of products taxed; the price variation corresponds to the change in the
amount levied per unit, i.e. to the change in the taxation price.
10.49
A more frequent case is that in which the tax represents a certain percentage
of the value of the transaction. The value of the revenue from such a tax then
depends upon:
The taxation price is then obtained by applying the rate to the price of the
product. The change in value of the revenue from a tax of this type can also be
divided into a volume change, determined by the change in the quantities of
products taxed, and a price change corresponding to the change in the taxation
price (b × c).
10.50
The amount of taxes on products, excluding VAT (D.212 and D.214) is measured
in terms of volume by applying to the quantities of products produced or
imported the taxation prices of the base year or by applying to the value of output or
imports, revalued at the prices of the base year, the tax rates of the base
year. Attention has to be paid to the fact that taxation prices may differ among
different uses. This is taken into account in the supply and use tables.
10.51
Similarly, the amount of subsidies on products (D.31) is measured in terms of
volume by applying to the quantities of products produced or imported the
subsidy prices of the base-year or by applying to the value of output or imports,
revalued at the prices of the base-year, the rates of subsidy of the base-year,
taking into account different subsidy prices for different uses.
10.52
VAT on products (D.211) is, both for the whole economy and for individual
industries and other users, calculated on a net basis and refers only to
non-deductible VAT. This is defined as the difference between VAT invoiced on the
products and VAT deductible by the users of these products. Alternatively, it is also
possible to define VAT on products as the sum of all non-deductible amounts
which have to be paid by users.
Non-deductible VAT at constant prices can be calculated by applying the VAT
rates in force in the base-year to the flows expressed in the prices of the
base-year. Any change in the rate of VAT for the current year will therefore be
reflected in the price index and not in the volume index of non-deductible VAT.
The fraction of eductible VAT in invoiced VAT and hence non-deductible VAT
may change:
A change in the amount of deductible VAT resulting from a change in the right
to deduct VAT will by the method described be treated as a change in the
taxation price, as will a change in the rate of invoiced VAT.
On the other hand, a change in the amount of deductible VAT resulting from a
change in the pattern of uses of the product constitutes a change in the volume
of deductible VAT to be reflected in the index of the volume of VAT on products.