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This Indicator shows the extent to which government expenditures are actually covered by revenues in the form of taxation.

The precise definition of the indicator is the Proportion of domestic budgetary central government expenditure funded by taxes. Budgetary central government, described in 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.).

Ministry of Finance (MOF)

Ministry of Finance (MOF)

Annual

Percentage (%)

Indicator 17.1.2 Proportion of domestic budgetary central government expenditure funded by taxes supports an understanding of the extent to which countries’ recurrent and capital outlays are actually covered by domestic revenue mobilization in the form of taxation.

17.1.2 will be derived using series that are basic to the GFS reporting framework. This enhances the comparability of data across countries and ensures establishing robust analytical findings to support SDG monitoring using fiscal data. There are also complementarities with Indicator 17.1.1, which facilitates an understanding of the "tax burden". Both indicators are important in relation to achieving longer-term development objectives.

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.

General government units have four types of revenue: (i) compulsory levies in the form of taxes and certain types of social contributions; (ii) property income derived from the ownership of assets; (iii) sales of goods and services; and (iv) other transfers receivable from other units. Of these, compulsory levies and transfers are considered the main sources of revenue for most general government units (GFSM 2014 paragraph 5.1). These four types of revenue are represented by the following aggregates: Taxes, Social contributions, Grants, Other revenue. Similarly, the economic classification of expense identifies eight types of expense incurred according to the economic process involved. For example, compensation of employees, use of goods and services, and consumption of fixed capital all relate to the costs of producing nonmarket (and, in certain instances, market) goods and services by government. Subsidies, grants, social benefits, and transfers other than grants relate to transfers in cash or in kind and are aimed at redistributing income and wealth. The functional classification of expense provides information on the purpose for which an expense was incurred. Examples of functions are education, health, and environmental protection. The detailed GFS classification structure used in the annual questionnaire that is used by countries to report data allows for sufficient disaggregation for compiling 17.1.2.

GFS budgetary central government revenue series - collected in Table 1 of the annual data 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 nonfinancial assets”, as defined in GFSM 2014).  GFS Expenditure series are reported by the economic classification in Tables 2, and 3 (items under code 31).

OR

Proportion of domestic budget funded by domestic taxes = Central Government taxes / Central Government Expenditures

This indicator will provide a cross-country comparable dataset that highlights the relationship between the executed national budget and the tax revenue administration.

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.

All the metadata shown in this document was gathered from United Nation Statistics Division. The metadata was extracted from https://unstats.un.org/sdgs/metadata/.