Tax on Production and Import

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    IMPLAN Support
    Hi Monica, Thank you for your post. Taxes on Production and Imports (TOPI): includes sales and excise taxes, customs duties, property taxes, motor vehicle licenses, severance taxes, other taxes, and special assessments. It excludes most non-tax payments, and as the name indicates, subsidies are netted out. (BEA). The following article: https://implan.com/index.php?view=download&alias=222-tax-impact-report&category_slug=version-three-files&option=com_docman&Itemid=1480 will help in sifting out which values are included in TOPI, this information starts at page 8. Thanks!
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    mrhaynes
    Thanks. I have been looking at that document and it supplies some of the answers I'm looking for but I still have some remaining questions... 1. Would state-imposed excise taxes fall under the "TOPI: Excise Taxes" category or under "TOPI: Sales Tax"? The only category that explicitly indicates excise taxes (15017) seems to suggest that they are federal taxes only.
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    IMPLAN Support
    Hi Monica, Could you tell us what the specific tax is as this will help us to determine the category this would fall into. Thanks!
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    mrhaynes
    There are three that I am concerned with: gasoline liquor / alcohol cigarettes Thanks!
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    mrhaynes
    I have another question related to the same project... I'm examining the impact of removing the interchange fee (credit card swipe fee) from the sales tax for a selected group of industries. In essence, I am estimating the total amount that certain retail and hospitality sectors currently pay in swipe fees on sales tax, and then increasing their industry sales by that amount. It seems to me that the additional dollars would not be margined, because it's not an increase in consumer spending but I wanted to confirm that before proceeding. Also, the sales tax data I have (from Mn Dept of Revenue) is for 2012, so should I set that as my event year? Thanks, Monica
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    IMPLAN Support
    Hi Monica, Thank you for your post. The following types of tax: gasoline, liquor / alcohol and cigarettes would be under TOPI- Sales Tax. Your Event Year should be 2012 if that is the year of your entered data. The increase retailers sales would be entered as a Gross Retail Margined (GRM) value. GRM, indicates that you are entering the operational value of the store into the Industry Sales field. This is however if you know that the retailer would use those monies for their operational expenses. If those use those monies though for savings then this would be leaked from the model as their would be no production associated to it. Thanks
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    mrhaynes
    I have a follow up question for you about this study. The study is regarding credit card swipe fees (transaction fees) for the state of MN. I'm trying to estimate the total dollar amount that is collected in state sales and excise tax for a variety of merchants and retailers, in order to estimate what the benefit to those businesses would be if the swipe fee (about 2% of credit card sales) was not charged on sales/excise tax amounts. Here's my dilemma... I have found sales and excise tax $ amounts collected for the state (table_1_tax_collections.xls), for the year 2012, and I also have data from the economic census on the percentage of sales accounted for by kind of business (CensusProductBreakOuts.pdf, page 246). So I know that there was $850 million in motor fuels excise taxes collected in 2012, and that 96% of automotive fuels were sold at Gasoline Stations. But when I add up all the taxes collected that number is so much higher than the TOPI in IMPLAN! Like, 10 times the value of the TOPI. I am hesitant to use such a large number when it doesn't jive with what IMPLAN has in its data. Do you have any recommendations?
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    IMPLAN Support
    We found a couple of MN-specific documents that might be helpful to you although they indicate that the issue you are looking into appears to be extremely difficult to tease out. http://www.revenue.state.mn.us/legislativeupdate/Documents/Motor_Fuels_Tax.pdf This document explains that what is classified as motor fuels tax in Minnesota. Note that the tax also applies to aviation fuels and that the tax is collected by distributors and possibly other entities, not just retail gas stations. Another issue is that grocery stores and general merchandise stores sell gas, so some TOPI from those retail sectors might be going towards motor fuels sales. Perhaps a more important consideration is that several establishments in the wholesale sector are sellers of petroleum and petroleum products. See Naics 424710 here: http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=424710&search=2012%20NAICS%20Search. Many of the distributors likely are classified in this wholesale sector, but some may be retail, and some appear to be refineries, too. Minnesota publishes a list of Petroleum Licensed Distributors here: http://www.revenue.state.mn.us/businesses/petroleum/Documents/Licensed%20Distributors%201_1_15.pdf According to the 2007 Economic Census, output for NAICS 4247 – Petroleum and Petroleum Products Merchant Wholesalers in Minnesota was approximately $11 billion, which is around a third of total Minnesota wholesale output. It appears that much of Motor Fuel tax collections would be in this sector’s TOPI. According to the Census of Governments, MN appears to consider the motor fuels tax a “sales tax,” and it can be collected at various points along the supply chain. Additionally some refineries in MN also own gas stations, and that can complicate the assignment of TOPI (although, in principle, the company’s accounting process properly allocates it among the refinery establishments and retail establishments). Here are a few other things to note. 1. TOPI is net of subsidies – that is, TOPI = taxes on production and imports – subsidies. So if that Sector received any subsidies that year, TOPI will be lower than the taxes that Sector paid. We wouldn’t have expected gas stations to be subsidized but our web search found many mentions of tax refunds so it is definitely worth investigating in the case of MN. 2. We would have assumed that motor fuels excise taxes are paid by the refining/blending sector, while motor fuels sales taxes are paid by the retail sector. The sales tax figure is $559,000, which is 2/3 the size of the excise tax figure. We could not find these same details for MN in particular but looking at MS seems to suggest that the retail sector does not pay the entirety (or possibly any?) of the excise taxes (see page 4 of the attached booklet.pdf): “The tax accrues when: A. Gasoline is withdrawn from storage at a refinery for sale or distribution in the State. B. Gasoline is unloaded from a barge or withdrawn from a common carrier pipeline and placed in storage at a marine or pipeline terminal. C. Gasoline that is imported by common carrier is unloaded by that carrier. D. Gasoline that is imported by a person using any means other than a common carrier enters the State. E. Gasoline is purchased or received tax free by any person. F. Blend stock is blended with gasoline.” And page 7 of this report (http://www.maineenergymarketers.com/documents/member-tech-bulletins/tbs17.pdf) has this to say about Federal excise fuel taxes (may differ for states): “For years federal excise taxes on diesel fuel were collected at the point of retail sale. The seller was responsible for remitting the collected taxes to the IRS. If the fuel was sold for a taxable use, you collected the tax, if it was sold for an exempt use, you did not. This changed in the 80s. In 1985, there was a television expose about excise tax cheating followed by Congressional hearings at which mobsters testified that millions of dollars were being stolen in excise tax fraud. As a result, in 1987 the point of collection of federal excise taxes was moved from the retailer to the wholesaler. This change resulted in the complicated system of Form 637 registrations, wholesale distributor qualifications, and different certifications from different customers that fuel purchased tax-free was being used for a tax-exempt purpose. The most recent changes came in 1993 when the President and the Congress were seeking ways to cut the federal deficit. After attempts to levy a BTU tax failed, the excise tax was increased and the point of collection for diesel taxes was again moved upstream, this time from the wholesaler to the terminal.” Please let us know if you have any further questions.
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    IMPLAN Support
    Hello, We found a couple of MN-specific documents that might be helpful to you although they indicate that the issue you are looking into appears to be extremely difficult to tease out. http://www.revenue.state.mn.us/legislativeupdate/Documents/Motor_Fuels_Tax.pdf This document explains that what is classified as motor fuels tax in Minnesota. Note that the tax also applies to aviation fuels and that the tax is collected by distributors and possibly other entities, not just retail gas stations. Another issue is that grocery stores and general merchandise stores sell gas, so some TOPI from those retail sectors might be going towards motor fuels sales. Perhaps a more important consideration is that several establishments in the wholesale sector are sellers of petroleum and petroleum products. See Naics 424710 here: http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=424710&search=2012%20NAICS%20Search. Many of the distributors likely are classified in this wholesale sector, but some may be retail, and some appear to be refineries, too. Minnesota publishes a list of Petroleum Licensed Distributors here: http://www.revenue.state.mn.us/businesses/petroleum/Documents/Licensed%20Distributors%201_1_15.pdf According to the 2007 Economic Census, output for NAICS 4247 – Petroleum and Petroleum Products Merchant Wholesalers in Minnesota was approximately $11 billion, which is around a third of total Minnesota wholesale output. It appears that much of Motor Fuel tax collections would be in this sector’s TOPI. According to the Census of Governments, MN appears to consider the motor fuels tax a “sales tax,” and it can be collected at various points along the supply chain. Additionally some refineries in MN also own gas stations, and that can complicate the assignment of TOPI (although, in principle, the company’s accounting process properly allocates it among the refinery establishments and retail establishments). Here are a few other things to note. 1. TOPI is net of subsidies – that is, TOPI = taxes on production and imports – subsidies. So if that Sector received any subsidies that year, TOPI will be lower than the taxes that Sector paid. We wouldn’t have expected gas stations to be subsidized but our web-search found many mentions of tax refunds so it is definitely worth investigating in the case of MN. 2. We would have assumed that motor fuels excise taxes are paid by the refining/blending sector, while motor fuels sales taxes are paid by the retail sector. The sales tax figure is $559,000, which is 2/3 the size of the excise tax figure. We could not find these same details for MN in particular but looking at MS seems to suggest that the retail sector does not pay the entirety (or possibly any?) of the excise taxes (see page 4 of the attached booklet.pdf): “The tax accrues when: A. Gasoline is withdrawn from storage at a refinery for sale or distribution in the State. B. Gasoline is unloaded from a barge or withdrawn from a common carrier pipeline and placed in storage at a marine or pipeline terminal. C. Gasoline that is imported by common carrier is unloaded by that carrier. D. Gasoline that is imported by a person using any means other than a common carrier enters the State. E. Gasoline is purchased or received tax free by any person. F. Blend stock is blended with gasoline.” And page 7 of this report (http://www.maineenergymarketers.com/documents/member-tech-bulletins/tbs17.pdf) has this to say about Federal excise fuel taxes (may differ for states): “For years federal excise taxes on diesel fuel were collected at the point of retail sale. The seller was responsible for remitting the collected taxes to the IRS. If the fuel was sold for a taxable use, you collected the tax, if it was sold for an exempt use, you did not. This changed in the 80s. In 1985, there was a television expose about excise tax cheating followed by Congressional hearings at which mobsters testified that millions of dollars were being stolen in excise tax fraud. As a result, in 1987 the point of collection of federal excise taxes was moved from the retailer to the wholesaler. This change resulted in the complicated system of Form 637 registrations, wholesale distributor qualifications, and different certifications from different customers that fuel purchased tax-free was being used for a tax-exempt purpose. The most recent changes came in 1993 when the President and the Congress were seeking ways to cut the federal deficit. After attempts to levy a BTU tax failed, the excise tax was increased and the point of collection for diesel taxes was again moved upstream, this time from the wholesaler to the terminal.” Please let us know if you have any further questions.
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