Indicator 17.1.2 Proportion of domestic budget funded by domestic taxes

Indicator 17.1.2: Proportion of domestic budget funded by domestic taxes

Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection

International Monetary Fund (IMF) Statistics Department (Government Finance Division)

Definition:

The precise definition of the indicator is the Proportion of domestic budgetary central government expenditure funded by taxes. Budgetary central government, described in the Government Finance Statistics Manual (GFSM) 2014 (paragraph 2.81) is an institutional unit of the general government sector particularly important in terms of size and power, particularly the power to exercise control over many other units and entities. The budgetary central government is often a single unit of the central government that encompasses the fundamental activities of the national executive, legislative, and judiciary powers. This component of general government is usually covered by the main (or general) budget.

The budgetary central government’s revenue (and expense) are normally regulated and controlled by a ministry of finance, or its functional equivalent, by means of a budget approved by the legislature. Most of the ministries, departments, agencies, boards, commissions, judicial authorities, legislative bodies, and other entities that make up the budgetary central government are not separate institutional units. This is because they generally do not have the authority to own assets, incur liabilities, or engage in transactions in their own right (see GFSM 2014 paragraph 2.42). including references to standards and classifications, preferably relying on international agreed definitions. The indicator definition should be unambiguous and expressed in universally applicable terms. It must clearly express the unit of measurement (proportion, dollars, number of people, etc.).

Concepts:

The key concepts and terms associated with the indicator are outlined in GFSM 2014, as are the associated classifications. Revenue is defined in Chapter 4 (paragraph 4.23) and the associated classifications are detailed in Chapter 5. Expenditure is also defined in Chapter 4 (paragraph 4.21) while the associated detailed classifications and concepts used for calculating this aggregate are outlined in Chapter 6 - 8.

Percent (%)

The actual and recommended sources of data for deriving this indicator are the fiscal statistics reported to the IMF’s Statistics Department. These come from various agencies (Ministries of Finance, Central Banks, National Statistics Offices, etc.) and are compiled according to a standardized method for data collection: the annual GFS Questionnaire. In the 2020 annual reporting cycle, approximately 130 countries reported the relevant series for monitoring indicator 17.1.2. For current non-reporting countries that have demonstrated the capacity to compile and report the relevant GFS revenue series, we are engaged in outreach to the national authorities, in consultation with the respective IMF Area Departments and Offices of the Executive Director, as needed. The steps outlined above should allow, over time, for covering virtually the entire IMF membership.

See 3.a.

At this time, the IMF recommends no regional and global aggregates be established. While we see no issues in terms of the feasibility and suitability of 17.1.2 for cross-country comparisons, we question the relevance of one single global indicator that combines data for advanced economies with those of emerging market and low-income countries.

For reporting this indicator, budgetary central government is considered the most appropriate level of institutional coverage as it will encompass all countries. In principle, GFS should cover all entities that materially affect fiscal policies. However, for most developing and many emerging market economies compiling data for the consolidated general government and its subsectors is problematic owing to limitations in the availability and/or timeliness of source data. A country may have one central government; several state, provincial, or regional governments; and many local governments, and the GFSM 2014 recommends that statistics should be compiled for all such general government units. This reporting structure is illustrated below:

Structure of the general government sector and its subsectors

There are some countries that report “consolidated central government” without necessarily providing the budgetary central government sub-sector separately. The IMF intends to provide data for the budgetary central government and will work to address this issue, where needed, as outlined under section 5, above.

GFS budgetary central government revenue series - collected in Table 1 of the annual GFS Questionnaire provided to all countries - will be combined with series on budgetary central government expenditure (actual execution of the main budget) on “expense” plus the “net acquisition of non-financial assets”, as defined in GFSM 2014). GFS Expenditure series are reported by the economic classification in Tables 2, and 3 (items under code 31). Alternatively, for those countries that report total expenditure according to the functional classification (COFOG) in GFS Table 7, a similar calculation can be made. The Proportion of domestic budgetary central government expenditure funded by taxes will be calculated as (Taxes / Expenditure expressed as a %) using the following data series:

An Example: Calculation of SDG Indicator 17.1.2

Consistency across countries will be ensured through the underlying structure of the IMF GFS database and application of one simple mathematical formula to make computations on the country reported source data used to produce the indicator (no adjustments and/or weighting techniques will be applied). Mixed sources are not being used nor will the calculation change over time (i.e., there are no discontinuities in the underlying series as these are key aggregates/components in all country reported GFS series).

2023-12-15

International Monetary Fund (IMF) Statistics Department (Government Finance Division)

Indicator 17.1.1: Total government revenue as a proportion of GDP, by source

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