Understanding Taxes on Production & Imports, Net of Subsidies (TOPI)

Candi Clouse, PhD

February 20, 2020 15:05

INTRODUCTION:

Taxes on Production & Imports, Net of Subsidies (TOPI) (previously called Taxes) include sales and excise taxes, customs duties, property taxes, motor vehicle licenses, severance taxes, other taxes, and special assessments. For all Industries other than government enterprises, subsidies are counted as a negative value towards TOPI, meaning that they are paying out of TOPI instead of generating TOPI. Because TOPI is net of subsidies, it can be negative for a given Industry in a given year if that industry received more subsidies from the government than it paid out in these specific taxes in that year.

Note: TOPI does not include all taxes paid by an industry. For example, social insurance taxes are a part of Employee Compensation, and profits taxes are part of Other Property Income.

DETAILS:

In IMPLAN, taxes are Industry and geographically specific. However, the breakout by tax category (e.g., sales tax, property tax, etc.) is not Industry specific, due to raw data limitations. Also, there is no way within IMPLAN to know the break out of the components of each subset of tax (ie Sales Tax) into additional detail; the raw data we use does not have this level of detail. The ratios for Taxes on Production & Imports (TOPI) : Output and OPI : Output are the only Industry-specific information incorporated in the calculation of the Tax Impact Report.

The tax impact report splits the TOPI tax impacts into subcategories based on each region's contribution of the collected tax. IMPLAN does not have industry-specific taxes paid (other than total TOPI, which is industry-specific) so the distribution will be an all industry average.

Property Taxes paid by Households on their primary residences are not displayed as a payment from Households but rather from the TOPI column. This is because Households pay these Property Taxes through Sector 449 - Owner-occupied dwellings. The property taxes shown as being paid by Households are for other big-ticket items such as boats and cars. Direct property taxes on construction impacts are not property taxes on the built structure itself - just on the construction companies' properties. To get the building's property taxes you have to run the operations phase.

I-O models by default treat TOPI as a leakage, meaning that any TOPI generated as part of an analysis will not generate any additional effects.

WHERE TO FIND IT IN IMPLAN:

ON THE REGIONS SCREEN

The REGIONS screen offers a massive assortment of data points in Region Details. The total TOPI for your Region is on the Regions Overview page. To examine TOPI by Industry click

> Study Area Data

> Industry Detail

ON THE RESULTS SCREEN

The Summary Results Overview will display a summary of the tax results. TOPI is a piece of Value Added, so you can see details it in third table on the Value Added tab entitled Value Added Components by Industry.

To dig further into the details, navigate to the Tax Results tab. Here you will find a tables for taxes by State + Local, Federal, County, Sub County General, Sub County Special District, and State. In each table you will see a breakdown by row of the components of TOPI. Visit the article Where's the Tax for more information on what is included in each breakout of TOPI.

HOW IS IT CALCULATED?

Taxes on Production & Imports, Net of Subsidies (TOPI) is one piece of Output. For details on how IMPLAN estimates TOPI, visit the article Generation and Interpretation of IMPLAN's Tax Impact Report.