Question 9

Does the Executive’s Budget Proposal or any supporting budget documentation present the individual sources of tax revenue (such as income tax or VAT) for the budget year?
 * a. Yes, individual sources of tax revenue accounting for all tax revenue are presented.
 * b. Yes, individual sources of tax revenue accounting for at least two-thirds of, but not all, tax revenues are presented.
 * c. Yes, individual sources of tax revenue accounting for less than two-thirds of all tax revenues are presented.
 * d. No, individual sources of tax revenue are not presented.
 * e. Not applicable/other (please comment).

Note on revenues
Revenues generally are separated into two major categories: “tax” and “non-tax” revenues. Taxes are compulsory transfers that result from government exercising its sovereign power. The largest sources of tax revenue in some countries are taxes on personal and business income and taxes on goods and services, such as sales or value-added taxes. The category of non-tax revenues is more diverse, ranging from grants from international institutions and foreign governments to funds raised through the sale of government-provided goods and services. Note that some forms of revenue, such as contributions to social security funds, can be considered either a tax or non-tax revenue depending on the nature of the approach to these contributions. Particularly because different revenues have different characteristics, including who bears the burden of paying the tax and how collections are affected by economic conditions, it is helpful when estimates for revenues are disaggregated and displayed based on their sources.

For more information, please refer to the 2001 GFS manual, in particular Appendix 4.

Guidelines
Question 9 assesses the degree to which the individual sources of “tax” revenue are disaggregated in the budget. The largest sources of tax revenue in some countries are taxes on personal and business income and taxes on goods and services, such as sales or value-added taxes.

To answer “a,” the Executive’s Budget Proposal or its supporting documentation must present all individual sources of tax revenue for the budget year, and “other” or “miscellaneous” revenue must account for three percent or less of all tax revenue. To answer “b,” the Executive’s Budget Proposal or its supporting documentation must present individual sources of tax revenue that when combined account for at least two-thirds of all tax revenue, but not all revenue. A “c” answer applies if the Executive’s Budget Proposal or its supporting documentation presents individual sources of tax revenue that account for less than two-thirds of tax revenues. Answer “d” applies if individual sources of tax revenue are not presented.

1) "Other" categories
Watch out for aggregate categories, such as “other.” To receive an “a” answer, the “other” category has to be smaller than 3% of the total. If the “other” category is more than 3%, then the score should be “b.”

2) How should we define individual sources of revenue?
As a general rule of thumb, please follow the categories laid out in the IMF’s Government Financial Statistics Manual 2014, page 88 in the document, page 112 in the PDF.

To qualify as an individual source of revenue and not simply a category, the tax listed should be at the 4th level (e.g., “Individual income tax” and not simply “Income tax”).

For social contributions, the revenue source listed should be at the 2nd level (e.g., “Social contributions” would qualify as an individual source of revenue)

For grants, the revenue source listed can be at the 2nd level (“Grants”). For a classification under “Other revenue”, the revenue source listed should be at least 3rd level (e.g., “Property income”, “Sales of goods and services”, “Fines, penalties, and forfeits” all qualify as individual sources of revenue).