Implementing wage tax data in structural business statistics

Transcription

1 Using Admin Data Estimation approaches Vilnius 26 and 27 May, 211 Implementing wage tax in structural business statistics Gerlinde Dinges, Elisabeth Gruber, Sabine Zach Statistics Austria, Statistics Austria, Statistics Austria, Abstract In Austria, the Federal Statistics Act 2 has provided the legal basis for a better access to administrative. Turnover tax and social security have been used for producing SBS since 22. An additional administrative source, for which the basic conditions were created with reference year 28, is wage tax. In preparation for the actual use a detailed analysis of wage tax and a comparison of gross wages and salaries from wage tax with existing SBS at micro level were done. These processes were the basis for evaluating the usability of wage tax for purposes of SBS. Test calculations and analysis have shown promising results. As a consequence wage tax will be used in SBS for calculation of wages and salaries for enterprises below thresholds from the reference year 28 onwards. Keywords: administrative, wage tax, structural business statistic 1 Structural Business ss Statistics (SBS) in Austria Statistics Austria has developed a new strategy for producing Structural Business Statistics from the reference year 22 onwards. SBS is based on a yearly cut off survey or "concentration sample", in combination with the use of administrative sources and model based estimation. The strategy is comparable with a full census for selected key variables, because for different individual enterprises of the population are surveyed, available from administrative sources or imputed. On basis of available information from survey and administrative sources model based estimation is carried out for all other variables of enterprises below thresholds. Social security and VAT are the most important administrative sources, which were linked to the Business ss Register (BR) in a sufficient way since reference year 22. In general, economically important enterprises are in the statistical survey. In 28, 11% or about 35. enterprises were in the survey. They have represented 88% of total turnover, 69% of persons employed and 85% of gross wages and salaries. Enterprises below thresholds (89%), which were calculated with use of administrative sources and model based estimation, have represented only 12% of total turnover. (See Chart 1) ) These are mainly small and medium sized Austrian enterprises. Key for enterprises below thresholds like number of enterprises, economic activity, turnover or employment is available from BR or administrative sources. Estimation models for all other variables are based on enterprises in the survey. So parameters for regression and ratio estimation were calculated from enterprises in the survey, which are in structure most similar to enterprises below thresholds. For turnover related variables this strategy operated very well. l. Regarding employment it has to be noted that the smaller the enterprise the more important is the share of part-time time employees. Considerable differences in part-time shares

2 of large and small enterprises were observed. So an overestimation of wages and salaries was assumed for some economic activities in the past. Therefore wage tax are taken into consideration as an additional administrative source for calculation of wages and salaries for enterprises below thresholds. Chart 1: Coverage of key variables by surveyed enterprises in SBS 28 1% 8% 6% 4% 2% % 11% 89% 69% 31% 85% 88% 15% 12% Survey Cut off part Number of enterprises Persons employed Gross wages and salaries Turnover 2 Wage tax Wage tax is a special type of income tax and it is collected via deductions from the taxpayer s wages and salaries or pension. Wage tax statistics, which is produced by the unit Tax Statistics of Statistics Austria, is based on approximately 8. million pay slips issued to employees and pensioners. These are collected by the Austrian tax authorities from employers. According to paragraph 84 of income tax law 1, the employer must submit the pay slips in electronic form to the tax office at the company s place of business or to the responsible health-insurance institute after the end of the calendar year by the end of February. Normally tax information from pay slip forms is available on an annual basis. If the employment relation is terminated in the course of the calendar year, the employer must also forward a pay slip to the tax office at the company s place of business or to the health-insurance institute by the end of the following month. In the case of insolvency pay slips have to be transmitted by the end of the second month following the opening of the insolvency proceedings. In general, the following information is recorded in pay slips: Gross remuneration (gross wages and salaries) Basis for mandatory social-security contributions of the employee Mandatory social security contributions of the employee Assessment basis for contributions to a staff pension fund and the actually paid amount Basis for assessing wage tax Withhold wage tax For purposes of business statistics the variable gross remuneration is in the centre of interests. 1 Einkommensteuergesetz 1988 (EStG 1988), BGBl. Nr. 4/1998 in the relevant version.

3 The definitions of SBS and pay slips show a sufficient consistency. Therefore aggregated wage tax is a possible administrative source of information for wages and salaries on enterprise level for compiling SBS in Austria. As wage tax is retrieved by the Federal Data Processing Service Centre in early June, can be assumed as almost complete. After receiving, specific types of pay slips are eliminated by the tax statistics experts of Statistics Austria. These are e.g. pay slips for sickness benefit, since it is not a pension asset or income concern. Apparently incorrect pay slips are eliminated or corrected cted if possible. So files, which were already checked in advance by Tax Statistics Experts of Statistics Austria, were made available for purposes of SBS. Pay slips are provided on employee level (micro level). The structure of sets were analysed in order to define variables necessary for calculation of wages and salaries on enterprise level in the required level of detail. The following illustration (see Chart 2) ) shows the availability of information from social security and wage tax sources in question and how they are used for purposes of SBS. Chart 2: : Overview about relationship of pay slips and social security Pay slip Social security Gross remuneration Sex Status Full time / Part-time time per person Number of employees Sex Status annual average enterprise level Structural Business Statistics Personell expenditures Employment Gross wages Gross salaries Gross compensation for apprentices Salary earner Wage earner Homeworkers Apprentices Part-time time employees Minimum income earner

4 On micro level there are interdependencies between wages and salaries and structure of employees. So the following plausibility checks are carried out on enterprise level: If an enterprise has salary earners, gross salaries are necessary If an enterprise has wage earners, gross wages are necessary If an enterprise has apprentices, gross compensation for apprentices are necessary Wages and salaries range is also checked Because of these dependencies the structure of wage tax has to be consistent with the structure of social security on enterprise level. 3 Comparison of wage tax with SBS results for 27 After having detailed information about structure and contents of wage tax the next step was a comparison of wages and salaries from wage tax with SBS results. A better theoretical knowledge of the source in question and results of comparison of wage tax with SBS results for the reference year 27 should provide background information for further decisions. For preliminary analysis it was necessary to match wage tax with enterprise of SBS for 27. Data matching was carried out with the ID number of the employer. This ID number is the common link from enterprises of the BR to tax for Statistics Austria. The next step was an aggregation of wage tax to the relevant SBS aggregates. After having wages and salaries on enterprise level a summation of wages and salaries on industry level was conducted. It has to be noted that NACE Rev. 1.1 was used for classification of enterprises, because this was the official classification for publication of SBS results for 27. A distinction between enterprises in the survey and enterprises below thresholds was necessary for the following reasons: Comparison of survey with from administrative sources Checking the quality of model based estimation for enterprises below thresholds Influence of possible use of wage tax on the totals Analyses were carried out for enterprises for which matching was possible. First of all raw were taken into consideration and non attachable units were excluded. This was necessary for evaluation of deviations. In general a lower level of wages and salaries in enterprises below thresholds than in surveyed medium sized and large enterprises is expected. Although the smallest enterprises above thresholds were taken for calculation of estimation parameters an overestimation couldn t be excluded. In contrast to turnover related variables for personnel expenditures a key variable on a value basis 2 from administrative sources was not available till 28. Social security are on a unit basis only. The general decision regarding use of wage tax for SBS was dependent on the results of analysis. Chart 3 shows deviations between wage tax and SBS results for matched enterprises for the reference year 27 for total wages and salaries. The differences for those are shown for total enterprises, enterprises below thresholds and enterprises above thresholds. 2 Turnover from tax declarations are on a value basis so turnover related variables are linked to the maximum values of tax.

5 Chart 3: : Comparison of wage tax with SBS results 27 (in Thsd. EUR) First analysis of totals has shown that differences between wages and salaries of the two sources in question are rather small. As it can be seen from Chart 3 SBS results are still above wage tax. A comparison of results on a more detailed level of NACE has provided information about possible problems for certain economic activities. In order to recognize deviations, calculations were made at the lowest level of aggregation. They were carried out on 4-digit level of NACE, because this level is important t for publication of results. The following table shows gross results and deviations from wage tax for totals, surveyed enterprises and estimated enterprises by sections of NACE Rev. 1.1 for the reference year 27. Table 1: Comparison of wage tax with SBS results 27 by sections NACE Rev. 1.1 NACE Rev. 1.1 Sections C D E F G H I J K C-K Mining and quarrying Manufacturing Electricity, gas and water supply 1, , Construction Trade Hotels and restaurants Transport, storage and communication Financial intermediation 5, , Real estate, renting and business activities Total Wages and salaries in Mil. EUR SBS 27 Total Diff Wage Tax in % SBS 27 Survey Diff Wage Tax in % SBS 27 Estimation Diff Wage Tax in % , , , , , , , , , , , , , , , , , , ,15 6.5

6 A comparison of non weighted by sections of NACE has shown that there are economic activities with small deviations, but also activities with rather high differences. A detailed examination of considerable deviations was carried out on level of economic activity but also on micro level. Generally speaking, in NACE categories with rather high fluctuations of employees like construction or hotels and restaurants deviations were higher than in other activities. Furthermore considerable differences for transport and financial intermediation were observed. In summary for surveyed enterprises discrepancies resulted of single, mainly large enterprises, while deviations for estimated enterprises seemed to be additionally systematical. For enterprises below thresholds SBS was above wage tax for all economic activities. This indicates an overestimation of wages and salaries with model based estimation. It should be noted, that the real bias is smaller than shown in Table 1, because wage tax raw show an under coverage due to matching difficulties and must be weighted when used for SBS. Further examination of financial intermediation was not carried out, because for these activities are available from supervisory authorities. Different reasons were detected, of which the most important are: Enterprises, in which the financial year is not the calendar year. Units, which were subject to restructuring in the period under review. In most cases these are large enterprises with major influence on overall results. This is the case for sections I and J of NACE, where the differences can be reduced to single enterprises. Employees which are not included in SBS but for which pay slips have to be issued. These are employees working under a service contract for the enterprise depending on the contract in question a pay slip is issued. This is the case for selected activities in section K. For enterprises engaged in management of real estate the so called caretakers are included in wage tax ; this employment category is not included in SBS, because they are part of operating expenses for the enterprise in question and not part of personnel expenses. Slightly higher differences were recognized for activities with a rather high fluctuation than with stable employment. Major deviations for some economic activities were analysed and in most cases explainable. In summary results were very promising, but an unmodified inclusion in SBS was not possible. 4 Integration of wage tax into SBS 4.1 Matching of wage tax with social security Generally social security are linked with BR of Statistics Austria for many years. Information from social security authorities is attributed to have a very good quality and matches with enterprises in the BR are almost complete. So the first step in the course of integration procedure was a combination of wage tax with social security. Social security is linked to enterprises in BR on micro level and available on a monthly basis. Data sets contain employees at the end of the relevant reference month broken down by sex and so called social security codes. The social security code is a two digit code attributed to each employee according to status of employment. These codes are assignable to the SBS categories salary earner, wage earner or apprentice for each enterprise. Firstly a file from social security for further use in SBS has been extracted. This file includes the number of wage earners, salary earners and apprentices on an annual average and is taken as basis for number of employees per enterprise below but also above thresholds. The next step was a preparation of wage tax to get attachable sets. Concerning wage tax there are different possibilities of pay slips for an employee: One pay slip in one enterprise Several pay slips in one enterprise Several pay slips in several enterprises in the same month Several pay slips in several enterprises in different months

7 If the employee has changed his working conditions (from part-time to full-time) within the enterprise, an additional pay slip has to be issued. Another possibility for several pay slips per person is e.g. a correction of a pay slip or in case of insolvency of the enterprise. Additionally it is possible that one employee has more than one job in different enterprises. So the first exercise was a calculation of annual averages of pay slips in the breakdown of employment status per enterprise. Data matching was carried out with the encrypted ID number of employee and ID number of employer. Pay slips were weighted by length of employment on micro level and aggregated by sex, status and level of employment. Furthermore re an aggregation was carried out if more than one pay slip of a person by the same employer was available. In the case of several pay slips in one enterprise for the same period of time only one pay slip was kept for further calculations. While quantitative variables were summed up, qualitative variables were allocated according to the length of the reference period. So every employee was attributed to one pay slip per year and per enterprise. This was necessary to compare pay slip with the social security and to decide if it is taken for further calculations or not. Double counting should be avoided with this adjustment. After extensive plausibility checks processing for statistical purposes was continued. In the course of matching different ferent cases or conditions were detected and listed in Table 2. Table 2: : Conditions of linking pay slip with social security Number of employees No Social security Differences Pay slip Further Calculations 1 Yes = 2 No = 3 Yes = +/- 1 4 No 5 Yes Difference more than +/- 1 6 Yes Yes No Yes Yes Yes No Status of employees from social security are identical with employees by status from pay slips wages and salaries are taken from pay slips No further calculations necessary Employees from social security deviates in maximum one employee from pay slips wages and salaries are taken from pay slips and slightly reweighted by status of employment Wages and salaries from pay slips were not taken into account If number of employees from social security deviates more than one employee from pay slips - wages and salaries were reweighted by status of employees per capita Median imputation of wages and salaries per capita with activity based ratios The following example illustrates why reweighting by status of employment was necessary. An enterprise has e.g. 2 wage earner and 4 salary earner in social security. From wage tax 4 wage earners and 2 salary earners were counted. In general assignment of status of employment has a better quality in social security. Therefore the proportion of wages and salaries were reweighted. After having prepared wage tax for further use, calculation of wages and salaries for enterprises below thresholds was carried out. The cases listed in Table 2 are considered in further calculations.

8 Table 3: : Relevance of different cases for results Comparison after linking process for enterprises on micro level Coverage in % Employees per enterprise Wages and salaries per capita (in 1. ) No Employees - Social Security difference in in total detail Employees - Pay slip Number of enterprises Em- ployees Wages & salaries ratio median ratio median Table 3 shows the different Conditions of Table 2 enhanced with figures about coverage of number of enterprises, number of employees and wages and salaries. Furthermore ratios and median values of employees per enterprise and wages and salaries per capita are given. Results show that 37% of enterprises (Condition 2) ) below thresholds didn t have any employees in wage tax and social security. These are enterprises with self employed persons only. For 43.7% of enterprises social security and wage tax by status of employment are equal. So for 8.7% of enterprises below thresholds wage tax and social security coincide, which is a quite positive result. These enterprises count for about 61% of employees and wages and salaries of enterprises below thresholds. For further 9.8% differences are quite small. In summary for about 91% of the non-surveyed enterprises gross wages and salaries as well as information about number of part-time time employees can be taken from pay slips directly (Condition 1 to 3 in Table 3). For about 11% (9.8% in total) of these enterprises (Condition 3 in Table 3) ) a reweighting of the wages and salaries between employment statuses was necessary. For the remaining 9% of statistical units (Conditions 4 to 6 in Table 3) ) some imputation and weighting steps have to be done to ensure completeness of one enterprises gross amount of wages and salaries. If pay slip information is available but incomplete or incorrect (regarding number of employees in the breakdown by sex and status) enterprises es wage tax is weighted by the employees structure from social security authorities for reasons of further plausibility checks in SBS. For enterprises without pay slip information a simple median imputation of missing wages and salaries is done. In order to consider structural differences, missing values are replaced with estimated values, computed on economic activity level, based on information available in the set for the non-surveyed small units below legal SBS thresholds. It should be noted that at least 2 enterprises are required in each economic activity for median estimation of wages and salaries per capita. Otherwise the estimation process for economic activities concerned is computed on a higher activity level (4-digits or 3-digits of NACE). For 4.3% of enterprises (Conditions 5 and 6) median imputation or reweighting of wages and salaries was necessary. They account for 9.7% of wages and salaries, while wage tax for 5.2% of enterprises with no social security information were not taken into account. In contrast to Conditions 1 to 3, where gross values from wage tax remained unchanged for Conditions 4 to 6 wage tax values were adjusted according to social security information. Chart 4 illustrates weighting-effects effects by means of scatterplots for the selected economic activities 412 (Construction of residential and non-residential buildings), 4511 (Sale of cars and light motor vehicles) and 4941 (Freight transport by road). On the left-hand side of Chart 4 raw for wages and salaries from wage tax

9 are visualized (linked with SBS-employees); on the right-hand hand side the adjusted (and published) SBS- are visualized. Chart 4: : Scatterplot for selected economic activities before and after weighting process nace4=412 nace4=412 raw_ earnings earner_ft earner_ft (x1,x2,x3) ^= (z1,z2,z3) (x1,x2,x3) = (z1,z2,z3) weighted unweighted nace4=4511 nace4=4511 raw_ earnings earner_ft earner_ft (x1,x2,x3) ^= (z1,z2,z3) (x1,x2,x3) = (z1,z2,z3) weighted unweighted nace4=4941 nace4=4941 raw_ 9 earnings earner_ft earner_ft (x1,x2,x3) ^= (z1,z2,z3) (x1,x2,x3) = (z1,z2,z3) weighted unweighted Note: raw_ are the earnings from wage tax authorities, earner_ft are the employees from social security authorities in full-time-equivalent equivalent (under consideration of parttime and low income earner) As it can be seen from charts above weighting of wage tax was very important for reasons of comparability with social security and for quality reasons. 5 Evaluation of quality After successful analysis Statistics Austria implemented wage tax in SBS beginning with the reference year 28. First published in July 21, SBS were enhanced with a further administrative source. The use of wage tax for enterprises below thresholds is an action to improve quality, especially for inhomogeneous economic activities with a very divergent structure of wages and salaries. These activities can be hardly calculated unbiased by modelling only.

10 First of all quality of wage tax over time was checked in order to be able to evaluate structural stability of the new administrative source. Therefore per capita wages and salaries from wage tax for the reference years 27 and 28 were compared. Table 4 shows the results by sections of NACE Rev. 2. In general, deviations are rather small for most economic activities. Major differences of sections E and L of NACE Rev. 2 resulted from extraordinary effects of single enterprises. It can be concluded that wage tax are of stable quality, which is an important fact for application in SBS. Table 4: Per capita wages and salaries by sections of NACE Rev. 2 for 27 and 28 Wage tax Per capita wages and salaries NACE Rev.2 B C D E F G H I J K L M N S Deviation in % An example for ex post analysis was the comparison of wages and salaries for enterprises below thresholds for the reference years 27 and 28. Data shown in Chart 5 is the comparison of the estimation 27 without pay slip and the estimation 28 with wages and salaries implemented from pay slips. Results illustrated with box plots, show that for most economic activities the median value of estimated wages and salaries for the reference year 27 is above median wages and salaries from wages tax for reference year 28. With this confrontation the assumed overestimation of wages and salaries for enterprises below threshold with model based estimation due to known underestimation of part time employees is verified. Deviations for most NACE Rev.2 sections can be explained by that fact.

11 Chart 5: Comparison of the SBS estimation 27 and 28 Wages and salaries (in 1 ) 1 axis trimmed! estimation 27 estimation 28 B C D E F G H I J K L M N S95 NACE Rev. 2 Sections Source: Structural Business Statistics (estimation). While Chart 5 has compared enterprises below thresholds for 27 and 28 from different sources (wage tax for 28 and estimation for 27), Chart 6 describes the differences between large enterprises in the survey and small l and medium sized non surveyed enterprises. The box plot shows a significant difference in the median value of the two sets, but in general there are less outliers in the estimation than in the survey. The cut-off part is more homogeneous for most of NACE Rev.2 sections than the survey. Chart 6: : Comparison of the SBS estimation and survey 28 Wages and salaries per capita (in 1 ) 35 axis trimmed! B C D E F G H I J K L estimation 28 survey 28 M N S95 NACE Rev. 2 Sections Source: Structural Business Statistics 28. In the course of calculation problems occurred with employees having the status of an apprentice. In general, social security reports them as apprentices as well. But if the apprentice changes its status within a year (from apprentice to a wage or salary earner) the social security also changes the status and the apprentice is reported as wage or salary earner. The pay slips in many cases has continued to report them as apprentices for the remaining year, although the company is obliged to issue a new pay slip, where the apprentice is administrated as wage or salary earner. The initial problem with apprentices could be solved, by calculating them with the median deviation and also led to a much better quality. Data analysis, which was exemplary described above, was carried out in the course of the project. Results of quality analysis have provided further knowledge concerning use of wage tax for business statistics.

12 Successfully analyses carried out with SBS have shown, that the implementation of wage tax has led to a significant improvement of quality for selected SBS variables. 6 Conclusions and further developments With integration of wage tax a further key variable for producing SBS statistics for enterprises below thresholds is available from administrative sources. Therefore the main objective of the action was achieved. Model based calculated wages and salaries for enterprises below thresholds were replaced with wage tax. Additionally information concerning part time employment is available from wage tax. After comprehensive analysis of wage tax an automated approach for using wage tax for enterprises below thresholds in SBS was established. Nevertheless s further analysis will be necessary to be able to evaluate the development of wage tax over time and to solve problems for certain economic activities and certain categories of employees. Problems concerning wage tax with major influence on results occurred mainly for surveyed large and medium sized enterprises. Therefore it is not planned to replace surveyed wages and salaries for enterprises above thresholds with wage tax at the moment. Possibly an integration of wage tax for plausibility checks in the course of editing is foreseen. A replacement of primary collected SBS needs to be discussed with users and a change of National SBS Regulation will be required. So the first step for use of the administrative source in question was done. Regardless there will be some further analysis necessary for a broader use of wage tax in business statistics. So in summary it can be concluded that the main objective of the action was reached and the first step of integration n of a new administrative source in SBS was done. Furthermore preconditions for a further and extended use of wage tax were made. Dependent from legal requirements and available resources further steps will be taken by Statistics Austria.