impact of a new tax or fee on a specific sector


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    IMPLAN Support
    Hello Paul, You are correct in assuming that creating an impact with a negative industry sales is not suitable. Doing so would suggest that there was a reduction in Output equal to $25MM. In contrast, it appears that the industry is simply paying an increased tax which will result in a total of $25Million. Therefore, what really needs to be altered is industry Taxes on Production and Imports (TOPI). Typically, an increase in TOPI would be accounted for in a reduction in another portion of Value Added - likely lower profits (i.e., a reduction in Other Property Income). This assumes that overall production does not change (50 widgets were produced prior to the tax and 50 widgets are produced post the tax). Below are a few analysis options available to you. [ol] [li]To see the impact of this increased tax, you will need to run a "before" contribution analysis (links discussing conducting a contribution analysis are provided below), then create a new model and modify the study area data by increasing total TOPI for industry 28 to current TOPI + $25MM and run an "after" contribution analysis. The difference between the two results will be your impact. Do note that the only change would be in the Direct Tax impacts unless State/Local Government is internalized.[/li] [li]As an alternative to option #1 (customizing the model and running before and after analyses), you could run the new tax revenue through one of the government spending patterns. Sometimes these special taxes (or a given proportion of them) have to by law be spent on specific activities/programs (for example, a portion of Colorado’s marijuana tax has to be spent on drug abuse prevention programs). If you have any info on this, you could use one of our special government spending patterns*. If not, you could use one of the general (Education or Non-Education) SPs. [/li] [li]There is likely no short-term impact to sector 28 itself, other than reduced profits (OPI). We don’t know where or how those profits would have been spent so we don’t have much basis on which to analyze the impact of such a reduction. One could, if so desired, make the assumption that the company will then spend less on future investments by importing the Investment Spending Pattern for the sector and running all or some of tax value as a negative Activity Level for the ISP.[/li] [/ol] Finally, in addition to the assumption of constant widgets, it assumes constant $/widget. There is likely to be an increase in the price of the product. *You may or may not have this already installed on your system. If you do not, you can download them here To use these spending patterns in IMPLAN Pro, you will need to open your model, navigate to activities, and select Import > From another model. Sing Industry Contribution Analysis Multi-Industry Contribution Analysis (Can also be used for a single industry) Regards, IMPLAN Staff
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