Annex A. Subnational government organisation and finance: Sources and methodology
Sources of fiscal data
Data at country level are derived mainly from the OECD National Accounts harmonised according to the new standards of the System of National Accounts (SNA) 2008, implemented by most OECD countries since December 2014. They are complemented by data from Eurostat, IMF (Australia and Chile) and national statistical institutes for some countries or indicators (in particular, territorial organisation). Data were extracted in February 2018 and are from 2016, unless otherwise specified.
The statistical data for Israel are supplied by and under responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law."
Methodology
General government: the term "public" is used for "general government" sector (S.13). It includes four sub-sectors: central/federal government and related public entities (S.1311); federated government ("states”) and related public entities (S.1312); local government i.e. regional and local governments and related public entities (S.1313) and social security funds (S.1314). Data are consolidated within S.13 as well as within each subsector (neutralisation of financial cross-flows).
-
Subnational government: it is defined here as the sum (non consolidated) of subsectors S.1312 (federated government or "states") and S.1313 (local government).
-
Expenditure: they comprise current expenditure (compensation of employees, intermediate consumption, social expenditure, subsidies and other currrent transfers, taxes, financial charges, adjustments) and capital expenditure.
-
Expenditure/investment by area: they are defined according to the ten functions established in the Classification of the Functions of Government (COFOG): general public services; defence; public order and safety; economic affairs; environmental protection; housing and community amenities; health; recreation, culture and religion; education; and social protection.
-
Capital expenditure: they consist of investments (see below) and capital transfers (i.e. investment grants and subsidies in cash or in kind made by subnational governments to other institutional units).
-
Investment: it includes gross capital formation and acquisitions, less disposals of non-financial non-produced assets. Gross fixed capital formation (or fixed investment) is the main component of investment. NB: since the new standards of the SNA 2008, expenditures on research and development and weapons systems are included in gross fixed capital formation.
-
Revenue: they comprise tax revenue, transfers (current and capital grants and subsidies), tariffs/user charges and fees, property income and social contributions.
-
Tax revenue: tax revenue in this publication exclude revenue from social security contributions, which are included in the OECD definition of taxes (please see section A2 of the OECD Interpretative Guide for further information). They comprise taxes on production and imports (D2), current taxes on income and wealth (D5) and capital taxes (D91). They include both own-source (or "autonomous") taxes and shared taxes (tax revenue shared between central and subnational governments). NB: the SNA 2008 has introduced some changes concerning the classification of some shared taxes. In several countries, certain tax receipts have been recently reclassified as transfers and no longer as shared taxes.
-
Debt: based on the SNA 2008, gross debt includes the sum of the following liabilities: currency and deposits + debt securities + loans + insurance pension and standardised guarantees + other accounts payable. Most debt instruments are valued at market prices. NB: OECD definition differs from the one defined in the EU Maastricht protocol which is restricted to the sum of the first three items (i.e. mainly borrowing).
-
OECD and EU averages: they are in almost cases weighted (“OECD area average”). However, unweighted averages (“OECD country average” i.e. simple arithmetic average) have been used in some cases. The difference between weighted and unweighted averages can be significant. For example, subnational expenditure accounted for 40.4% of public expenditure in the OECD and 16.2% of GDP on weighed average but 31.8% of public expenditure and 13.5% of GDP on unweighted average. Both approaches are valuable. In one case (unweighted), a small country will have a same weight that a large country. In the other case, the weight of each country in the total is taken into consideration for the calculation. In weighted figures, the biggest countries drive the results because their population for a major share of OECD. Intermediary averages have also been used to make the distinction between OECD federal countries and OECD unitary countries.