1. General
This publication continues previous publications on Dealers and Revenue of the Total
Economy According to Value Added Tax starting with 1987 data. In 2004 a new sample was
drawn (for explanations of the new sampling method, see Para. 4). The tables in this
publication are based on the new sample, except for Tables 4 and 5.
Part A – Annual Tables
Tables 1-7 present data on revenue at current prices and at 2004 prices, except for Tables 4
and 5 in which the data are presented at 1995 prices. In addition, data are presented on: the
number of dealers, price changes, real changes in revenue, input as a percentage of total
revenue and the percentage of revenue on which no VAT is due out of total revenue – for the
entire economy, by industries.
Tables 8-12 present economic data on Trade and Services industries (and sometimes data for
the total economy, as well).
Table 13 presents the demography of businesses, which is calculated according to the
Business Register and not according to the VAT sample.
In Tables 1-3, 4A, 5A and 6-8, data of 2009 and 2010 were revised, compared with the
previous publication.
In addition, there are diagrams that describe the distribution by industries for: revenue,
number of dealers, percentage of inputs, and revenue at a VAT rate of 0% in 2011.
Part B – Monthly Indices 2010-2011
Table 16 presents monthly indices of revenue for industries at current prices.
Tables 17-32 present monthly indices at fixed prices of 2004 for the total economy, seasonally
adjusted indices and the trend changes.
The industry distribution is based on the Standard Classification of All Economic Activities
1993.1
1
The Central Bureau of Statistics (2003). Standard Industrial Classification of All Economic Activities
1993. Technical Publication No. 63. Second Edition. Jerusalem: the author.
( 15 )
2. Definitions and Explanations
2.1 General Definitions
Population – The survey population includes all the dealers who were active (see definition
of Active Dealer below) in 2009-2011. According to the definition of a dealer, the population
does not include: banks, insurance companies, provident funds, non-profit institutions (NPIs),
and government and municipal institutions. Similarly, data for Manufacturing industries do
not include the Diamond industry.
Exempt dealer – defined in the Value Added Tax (VAT) Law as dealer whose annual
turnover does not exceed NIS 76,884 (the amount valid as of January 2012, and updated
monthly according to the increase in the Consumer Price Index). The transactions of exempt
dealers are not subject to VAT (excluding land transactions), and exempt dealers do not
charge their clients VAT. The turnover of exempt dealers from transactions is reported to the
VAT authorities once a year, solely for the purpose of ratifying or changing the dealer’s legal
status. The file received every month from VAT does not include exempt dealers.
Therefore Tables 1-13 in this publication do not include the transactions of those
dealers. Tables 14-15 present data on the amount of exempt dealers and their revenue for
every industry. Those tables indicate that the largest number of exempt dealers was in
Personal and Other Services (21,207 dealers), followed by Health Services, Welfare and
Social Work (13,591 dealers). In Education there were 7,552 exempt dealers – over half of the
number of dealers who are liable for VAT. In Hairdressing and Beauty Parlours, the
percentage of revenue among exempt dealers was higher than among dealers who are liable
for VAT. In that industry, the number of exempt dealers was almost equivalent to that of
dealers who are liable for VAT. In the other industries, there were fewer exempt dealers, and
they comprised a small percentage in comparison with the dealers who are liable for VAT.
Dealer – defined for VAT as one who sells products and assets or supplies services, and is not
a non-profit or a financial institution; as well as someone who conducts a random transaction.
Active dealer – the Central Bureau of Statistics (CBS) defines an active dealer as someone
who reported revenue of more than zero at least one month in the year (i.e., nil rate dealers are
deducted).
On the other hand, VAT authorities define a dealer as active even if he reported zero revenue
during the entire year. This definition is used due to administrative considerations of tax
collection, and it differs – as noted – from the Bureau definition, as it appears in this
publication.
Nil rate dealers – the CBS defines a dealer at a VAT rate of 0% as a dealer who reports to
VAT authorities amounts of zero revenue all 12 months of a calendar year.
Dealers were enumerated in two ways:
a. Tables 2 and 8 present data concerning the number of active dealers, after deducting nil
dealers.
b. Tables 9-12 present data concerning the number of active dealers, after deducting nil
dealers and weighting active months for those dealers who were active only part of the year
(i.e., a dealer who was active only one month out of the entire year will be counted as 1/12,
( 16 )
etc.). The weighting makes possible an exact representation of the population. In addition,
it prevents duplication in the number of dealers, in cases when new dealer files that were
opened during the year replaced previous dealer files which were still registered with VAT.
2.2 Classification of Dealers – Definitions
Classification of Dealers by Definition of Dealer and Type of VAT File
Authorized dealer – a dealer who is registered according to registration requirements as an
authorized dealer, and is not an exempt dealer. Only an authorized dealer may issue invoices
that can be used for deducting input tax.
Authorized dealers are divided in the tables into three types:
Company – a dealer listed as a company with the Registrar of Companies.
Authorized dealer that is not a company – and henceforth, will be called an authorized
dealer.
Partnership/Dealers' Union – several dealers who requested to register as one dealer are
considered a partnership.
Dealers were classified according to the following categories:
Self-employed – anyone who does not hire employees.
Employer – a dealer who is not self-employed.
2.3 Economic Data – Definitions
For all the active dealers in a calendar year (except for exempt dealers), annual and monthly
data were accepted. The data received were: revenue on which VAT is due, revenue at a VAT
rate of 0%, revenue exempt from VAT, total inputs, descriptive characteristics of the dealers,
and their reporting patterns.
Definition of Revenue and its Components
Total VAT revenue includes: revenue on which VAT is due, revenue at a VAT rate of 0% and
revenue exempt from VAT.
Revenue on which VAT is Due
Revenue resulting from sales of goods and provision of services in Israel (except for revenue
at a VAT rate of 0%), as well as from the sale of fixed assets of the company. The revenue
includes all indirect taxes due on products and services, but not VAT itself.
Revenue at a VAT Rate of 0%
The revenue at a VAT rate of 0% is mainly revenue from export of goods and services, sales
of fresh fruit and vegetables, and from provision of services to tourists from abroad (which is,
in fact, export of services), and the tax rate on it is zero.
( 17 )
Revenue Exempt from VAT
This is revenue resulting from transactions on which the dealer is not entitled to a return of
VAT on inputs. For example, sale of diamonds within the Trade industry, rental of residential
property, and sale of goods and provision of services for consumption in Elat (except for sale
of vehicles and durable goods).
Total Inputs
Total inputs are the value of purchases made by the dealer from authorized dealers, which
entitle the dealer to VAT repayment. It includes current inputs for production and purchases of
capital formation, such as acquisition of buildings, equipment and machinery. Not included
are purchases that are exempt from VAT, such as fresh fruit and vegetables, crude diamonds,
and purchases from dealers whose revenue is exempt from VAT.
2.4 Explanations
2.4.1 Reporting Unit – Dealer
The reporting unit for VAT is different from the reporting unit for other administrative
sources, such as National Insurance or Income Tax. For VAT, the unit is the dealer whereas
for National Insurance, the unit is the employer.
These differences in the definitions often cause lack of correspondence between the data from
the different sources. For example, the dealer that appears in VAT in a certain economic
industry can be included in a number of files in National Insurance, which are classified in a
different industry than that reported to VAT, and vice versa. Another difference between the
reporting unit for VAT and for the other sources is in the case where the reporting unit for
VAT is a VAT partnership (see Para. 2.4.2).
2.4.2 VAT Partnerships/Dealers' Union
VAT Law requires a registered partnership to be registered with VAT as a partnership dealer.
In addition, the law also makes it possible for a number of dealers who are not a registered
partnership to register as a Dealers' Union for the sake of reporting jointly on revenue.
A partnership/dealers' union may include businesses from similar or different industries. In
cases where the companies are active in the same industry, the partnership classification is
obvious. In cases where the companies act in different industries, the partnership/dealers'
union is classified according to its main activity.
Because the entire partnership reporting to VAT is regarded as one unit in this publication,
there may be differences between the various industries compared with other surveys (e.g., the
Survey of All Economic Activities), in which each company joined in a partnership is
regarded separately, and each one has its own industry classification. For this reason as well,
there may be differences between Table 9, which is based on the VAT sample, and Table 13,
which is based on the Business Register.
The difficulty in classifying partnerships leads to small deviations in the estimates for
industries. For example, in 2011, 4.7% of all dealers were partnerships and their revenue
constituted 41% of total revenue in the economy. The revenue of dealers in Trade and
Services constitutes approximately 52% of the revenue of all partnerships.
( 18 )
2.4.3 Data Obtained from VAT Authorities
As stated above, the listing obtained from VAT authorities includes: dealer number (that
identifies the dealer), locality code and other address details, economic industry according to
VAT classification, total revenue, revenue on which VAT is due, revenue at nil rate, VATexempt revenue and total inputs.
It should be noted that the industry – according to which the processing is conducted –
undergoes a process of improvement in the Business Register. There are separate fields for
current inputs and inputs for capital formation in VAT files. However, neither those reporting
nor the VAT authority distinguish between those two types of data in practice. Therefore, it is
not possible to calculate the gross value added from these figures.
2.5 Notes
a.
In Transport, revenue was measured at market prices, and does not include support and
subsidies to public transport. The revenue of the Postal Authority is included only as of
April 2006, when it became a company.
b.
Financial and Business Activities does not include banks and insurance companies,
because they are not defined as authorized dealers (banks and insurance companies pay
VAT at a separate rate of 16% on wages and profit, and not on their transactions).
Therefore, this industry includes only: insurance agents, brokerage and services to the
financial industry, real estate, and business and legal services.
c.
Public Services include data only on health and education services. The public sector
institutions, e.g., government ministries, municipalities and non-profit institutions are not
considered dealers, and they pay VAT on wages at the lower rate of 8%.
3. Main Findings
3.1 Total Revenue of the Total Economy and the Changes in Revenue (Tables 1, 3)
The total amount of revenue of dealers in the economy, excluding diamonds, in 2011, totaled
NIS 1,525 billion, compared with NIS 1,414 billion in 2010.
The total nominal growth in 2011 rose by 7.9% in comparison with 2010. After deduction of
the rise in prices according to differential price indices (see Para. 4.5), the quantitative change
in the revenue of the total economy between 2010 and 2011 rose by 2.6%.
In 2011, the quantitative change in revenue was not uniform across industries. In
Manufacturing (excluding diamonds), a rise of 0.2% in real terms was recorded, following an
increase of 9.0% in 2010; in Construction, the revenue rose by 7.6% in real terms in 2011; in
Business Activities, an increase of 6.3% was recorded, and in Personal Services an increase of
5.9% was recorded; in Banking, Insurance and Other Financial Institutions, an increase of
4.9% in real terms was recorded; and in Agriculture, there was an increase of 2.3% in real
terms. In Electricity and Water Supply, an increase of 4.1% in real terms was recorded, and in
Health Services, Welfare and Social Work, there was an increase of 7.8% in real terms.
( 19 )
3.2
Distribution of Dealers and Distribution of Revenue, by Industries (Tables 1-2)
In 2011, there were 467,000 active dealers in the economy, of which 15,000 were in
Manufacturing (excl. diamonds), 91,000 in Trade, 138,000 in Business Activities, and 32,000
in Personal Services.
In 2011, dealers in Manufacturing comprised approximately 5% of all the surveyed dealers,
while their revenue was approximately 25% of the total revenue of the total economy. Trade
included approximately 20% of the dealers, and approximately 32% of the revenue; Business
Activities included approximately 29.5% of all dealers and approximately 14% of the
revenue; and in Personal Services there were approximately 7% of all dealers and only
approximately 1.5% of total revenue.
This difference in the characteristics of the industries results from the centralization of
revenue that exists in Manufacturing, as opposed to the spread of dealers that exists in the
Services industries. The centralization of revenue is expressed by the fact that a small number
of dealers have a relatively high share of the total revenue. Concurrently, the spread of dealers
is expressed in the fact that a large number of dealers have a relatively low share of the total
revenue.
3.3 Data on Partnerships
Centralization of the revenue as opposed to the spread of the number of dealers is also
apparent from an analysis of the distribution of partnerships (see Para. 2.4.2). Dividing the
partnerships into revenue groups in 2011 shows that about 58% of the partnerships reported a
revenue of NIS 1 million and less, and their revenue constitutes less than one percentage of
the total partnership revenue; whereas only 3.8% of the number of partnerships reported
revenue higher than NIS 100 million, and their revenue constituted more than 86% of total
partnership revenue.
Most partnerships with low revenue are those of self-employed persons who joined in a
partnership, and not partnerships of companies.
3.4 Statistics on Dealers, by Frequency of Reports
The pattern of reporting to VAT is monthly, bi-monthly and annual. It was found that in 2011,
approximately 16% of the dealers reported every month, and their revenue was approximately
90% of the total revenue in the economy; 83% of the dealers (approximately 9.7% of the
revenue) reported bi-monthly; and approximately 1% of the dealers (approximately 0.3% of
the revenue) reported once a year. Most of the dealers who report once a year are in the
diamonds industry, and report revenue at a VAT rate of 0%.
The data appearing in this publication do not include the diamonds industry.
Some of those reporting annually are located in Elat, in the free trade zone, and report revenue
that is exempt from VAT (except for durable goods).
( 20 )
3.5 Series of Data on Revenue of Industries at 1995 Prices for 1997-2004
and at 2004 Prices for 2005-2011 (Tables 4-5)
Tables 4 and 5 are based on the old sample and were not updated. These tables were prepared
on the basis of quantitative changes (each year compared with the previous one), which were
calculated and published in previous publications.
In Table 5 the index was calculated on the basis of Table 4 at 1995 prices.
Tables 4A and 5A were calculated according to the new sample, at 2004 prices.
3.6 Revenue of a VAT Rate of 0% and Revenue Exempt from VAT (Table 6)
Table 6 presents the percentage of revenue with a VAT rate of 0%, and revenue exempt from
VAT out of the total revenue. In Agriculture, this value constituted in 2011 approximately
36% of the division revenue, and it resulted from the sale of fruit and vegetables and from
export. In Manufacturing (excluding diamonds), approximately 46% of the revenue was at a
VAT rate of 0%, and resulted mainly from export. In Trade, approximately 12% of the
revenue was at a VAT rate of 0%, and resulted from the sale of fruit and vegetables. In
Accommodation Services and Restaurants, approximately 18% of the revenue was at a VAT
rate of 0%, and their source was exports of tourism services. The share of VAT-exempt
revenue in Transport was approximately 33%, and resulted mainly from the export of sea and
air transport services. In Computer Services and R&D, 62% of the revenue was at a VAT rate
of 0%. It is important to note that this table does not include data on "Exempt Dealers" (see
Section 2.1). Data about those dealers are presented in Tables 14 and 15.
3.7 Inputs on which VAT is Due (Table 7)
Table 7 presents percentages of the inputs on which VAT is due, out of the total revenue. As
mentioned above, the reports include inputs for investment purposes, acquisition of equipment
and buildings, and other current inputs. In 2011, the percentage of inputs in Manufacturing
was approximately 67%. This amount consists mainly of current inputs for production and
purchase of equipment, and does not include inputs exempt from VAT, such as fruit and
vegetables.
In Electricity and Water Supply, the inputs were approximately 77% of the total revenue. This
includes current inputs for production and investments, e.g., fuel for electricity production, as
well as electricity that serves as an input in the Water Supply industry. In addition, inputs
include investments in acquisition of machinery and equipment. In Construction, the inputs
were 77% of the total revenue, and they were inputs for construction and acquisition of
equipment as an investment.
In the Trade industry, the inputs were approximately 77% of the revenue. These were the
goods purchased by the industry for sale purposes.
In Business Activities, inputs totaled approximately 44% of the total revenue. In the
recreational, cultural and sporting activities industry, the percentage of inputs was
approximately 59%. The inputs in this industry include a high equipment factor, such as:
cinema halls, theaters and various sport facilities.
( 21 )
3.8 Statistics on Dealers, Revenue and Gross Value Added for Trade Industries
(Table 8)
Table 8 presents the number of active dealers (without weighting for number of months of
activity), revenue, gross value added and changes in real terms in the gross value added for
2009-2011, in Trade industries only.
Gross value added data for 2009-2011 were estimated according to the change in real terms in
revenue, based on VAT data.
In 2011, the gross value added in Trade industries rose by 1.8%, following an increase of
7.1% in 2010. The gross value added weights are slightly different from the revenue weights,
and therefore there is a difference between the total change in real terms in the revenue,
compared with the change in real terms in gross value added of the Trade industry, based on
the Survey of All Economic Activities.
3.9 Type of Employer and Type of VAT File, by Industry (Table 9)
Table 9 presents a cross-section of the revenue and number of dealers who are self-employed
and employers, and of authorized dealers, companies and partnerships (see Para. 2.4.2).
Unlike Tables 1-8, the number of dealers in Tables 9-12 is weighted by the number of months
of activity.
Self-employed compared with employers
Of all active dealers in the economy in 2011, 49% were self-employed, and 51% were
employers. However, there is a substantial gap between the share of self-employed and the
share of employers in the revenue – 5% and 95%, respectively.
Dealers according to type of file
In 2011, approximately 5% of all dealers in the economy were partnerships, and their revenue
was approximately 41% of the revenue in the economy; approximately 70% of dealers were
authorized dealers (who are not companies), and their revenue was approximately 8% of the
revenue in the economy; and approximately 25% of dealers were companies whose revenue
comprised approximately 51% of the revenue in the economy.
In Wholesale and Retail Trade, it was found that 5% of dealers were partnerships (42% of the
revenue), approximately 67% of dealers were authorized dealers (9% of the revenue) and
approximately 28.5% were companies (50% of the revenue).
Retail Trade is characterized by a higher percentage of authorized dealers, and reached
approximately 77% (19% of the revenue).
In Business Activities, 5% of the employers were partnerships (approximately 25% of the
revenue), 64% were authorized dealers (10% of the revenue), and approximately 31% were
companies (65% of the revenue).
The Personal Services, Education and Health industries are characterized by a high percentage
of authorized dealers.
( 22 )
3.10 Quantitative Characteristics, by Industry (Table 10)
Table 10 presents quarterly and average values of revenue for the entire economy, and for the
Trade and Services industries for 2011. The quarters in this table are calculated in relation to a
single business.
In the various Trade industries the boundary of lowest quartile is from NIS 179,000 to NIS
550,000 per year, compared with the cutoff of the entire economy – NIS 109,000 per year.
The definition of the lowest quartile is that one-quarter of all dealers had revenue which was
equal to or less than this value. For example, in Retail Sale of Electrical and Gas Household
Appliances (Class 5231), one-quarter of all dealers had a revenue of up to NIS 130,000 per
year.
In Business Activities, the boundary of the lowest quartile is from NIS 84,000 to NIS 232,000
per year. In Personal Services, it is from NIS 72,000 to NIS 137,000 per year.
3.11 Size Groups of Revenue, by Industry (Tables 11-12)
Table 11 examines the total economy, by permanent sixe groups of revenue amounts. This
distribution makes it possible to examine the amount of centralization in the industry, by
comparing the percentages of dealers and revenue in each industry, and the groups of revenue.
The size of the revenue group depends on which group one chooses to focus on. If one
chooses to present the low revenue groups, the distribution of dealers is more complete; if one
chooses to present the high revenue groups, the distribution of revenue is more complete. In
this publication, the second alternative was chosen. For example, in 2011 approximately 58%
of dealers in Telecommunications (Division 66) had a revenue of up to NIS 1 million;
whereas only 7% of dealers in this industry, each of whom had a revenue of over NIS 100
million, had approximately 97% of the total industry revenue.
Table 12 presents data only on partnerships (dealers' unions). The data in the table indicate
that the revenue of approximately 58% of the partnerships was up to NIS one million.
However, approximately 86% of the total revenue in the economy was in large partnerships
with a revenue of over NIS 100 million.
Note:
Tables 10 and 11 are tables that supplement information on the industry distribution, by
amount. Table 11 does not give enough details regarding dealers with a revenue of up to NIS
1 million. Rather, it presents those with the highest revenue in the economy. However, Table
10 makes it possible, through the quartile revenue values, to split up this group. For example,
in Retail Sale of Building Materials (Group 524), the value of the upper quartile was NIS
2,526,000. i.e., approximately 75% of the dealers in this industry had a revenue which was
equal to or lower than this value; whereas the two lowest revenue groups, of up to NIS 5
million, which included the upper quartile value, contained approximately 87% of all dealers.
( 23 )
3.12 Business Transactions – Demographics of Businesses in the Business Sector
(Table 13)
One of the important criteria for examining financial activity in the economy is the number of
businesses that were opened and closed during the calendar year. With the use of this index, it
is possible to estimate the scope of activity in the economy, and its business vitality. A
summary of the total gross entries of business openings and closings points to the vitality of
the economy; and a summary of net entries of business openings and closings points to the
expansion or reduction of the business activities in the economy. Closer examination by
industries shows the expansion or reduction of activity in specific industries and their vitality.
Table 13 was calculated from the Business Register file, which was established at the Central
Bureau of Statistics. The Business Register includes information from the VAT file and the
employers’ file of the National Insurance Institute. Business openings include businesses that
opened during the current year, even if VAT data were not reported, as well as businesses that
had been considered closed and reported that they resumed activity. Business closings include
businesses that closed during the current year, including dealers who reported 0% VAT during
the year. In this table, as opposed to the rest of the tables in this publication, Manufacturing
also includes diamonds, and Wholesale Trade also includes trade in diamonds.
In Table 13, it can be seen that in 2011 approximately 50,000 businesses opened, and
approximately 38,000 businesses closed. This is an increase of approximately 12,000
businesses in the business sector. In 2010, an increase of approximately 9,000 in the number
of businesses was recorded.
The number of businesses in Computer and Related Services and R&D, which include startup companies, grew in 2011 by 6.4%, after a rise of 5.9% in 2010. The number of businesses
in Other Business Activities (e.g., services of lawyers, accounting, market research,
architecture, and advertising) increased by 4.8% in 2011, following an increase of 3.8% in
2010. In Trade, the number of businesses grew by 1.2% in 2011, after a rise of 0.7% in 2010.
In Accommodation Services and Restaurants, a rise of 2.7% occurred in the number of
businesses in 2011, continuing a rise of 3% in 2010. In Health Services, Welfare and Social
Work, a rise of approximately 3% was recorded in the number of businesses in 2011,
continuing a rise of 3.5% in 2010. In Construction and in Electricity and Water Supply, there
was a 3.3% increase in the number of businesses in 2011, continuing a 1.8% increase in 2010.
The downward trend in the number of businesses in Manufacturing in 2010 and 2009 was
followed by a slight increase of 0.3% in the number of businesses in 2011. In Transport and
Communications, the downward trend diminished from 0.9% in 2010 to 0.4% in 2011. In
sum, there was an increase of 2.6% in the number of businesses in the total economy in 2011,
continuing an increase of 1.9% in 2010.
( 24 )
4. Methods
4.1 The Sample
4.1.1 General
The VAT sample is planned so that the size of revenue, not the number of dealers, is
estimated effectively. In the new sample as of 2004, the sampling method was changed from
sampling proportionately to size to sampling in size strata. The sampling frame was divided
into sample strata, which were defined as size groups of revenue within specific industries.
The sample was extracted at a uniform probability for each sample stratum. The dealers with
the highest revenues (in the highest sample stratum) in each industry are sampled with
certainty. The method was changed in order to deal more effectively with the long-term
dynamics of businesses. A business that is a partnership is sampled as a single unit, without
relating to the partners.
4.1.2 Basic Sample
The basic sampling frame was extracted from the CBS Business Register. At the time of
planning the basic sample, the sampling frame included all the businesses that belong to the
VAT file, that were active in 2003, except for dealers in the diamond industry and dealers who
report only random deals. A computerized algorithm determined the boundaries of the size
groups and a sample size was allocated for each stratum. In each industry the dealers were
divided into size strata according to the value of the total annual revenue of the business. In
each sampling stratum the dealers were sampled at equal probabilities according to their
allocation (the sampling probability changes with each stratum), and dealers in the top size
stratum in each industry were all sampled with certainty.
Each sampling unit in the framework was assigned a ‘Permanent Random Number’ (PRN),
which was used throughout the survey. This number was intended to ensure, as much as
possible, the continuity of the sample over time.
4.1.3 Supplementary Samples – New Businesses
New businesses are frequently opened, and in order to keep the sample up to date and avoid
undercoverage of new businesses, a supplementary sample of new businesses is issued every 2
months. For this purpose, a sampling frame of units created during this period, known as a
supplementary sample is used. The units in the frame intended for supplementary samples are
allocated to strata by the division boundaries determined in the basic sample (in accordance
with the industry and the size of the new business).
The process of supplementary sampling is “accumulative sampling”, in which the number of
those being sampled in the supplement depends, inter alia, on the size of the accumulative
sample up to the previous supplement, and the size of the accumulative sample required for
the present supplement. In this method, the difference of the sample size in the stratum
beyond the supplements is minimal.
New dealers who have not yet been allocated to a sample stratum go into a “waiting group”
and are added to estimates at probability 1; after two months the possibility of including them
in the sampling frame will be re-examined.
( 25 )
Also, in addition to supplementary sampling, the sample is updated annually (see Para. 4.1.4).
4.1.4 Revision
The dynamics of businesses in the economy (businesses grow, shrink or close down) dictates
updating their representation in the sample, in order to improve the quality of the estimates.
Therefore, once a year a revision of the sample is performed. The sample strata of all dealers
in the frame are updated according to the dealer’s revenues in the last year, and consequently
an update of the sample and sample probabilities is performed, while attempting to preserve as
much as possible the continuity of the sample. In addition, units that are closed down are
deleted from the frame and the sample.
4.1.5 Estimation
Every dealer in the sample has a weighting factor assigned to him, which is the opposite of the
sample probability. The weighting factor reflects the number of dealers in the population that
the dealer represents in the sample. The data on every dealer in the sample were multiplied by
his weighting factor. As noted, the sample probability was determined so that it will greatly
reduce the relative sample errors of the estimated revenue. It is also possible to estimate the
number of dealers or any other datum in the same manner (multiplication by the weighting
factor), but the relative sample error will generally be bigger.
4.2 Tests of Revenue Data
Revenue data undergo tests of receiving and entering data. These tests identify errors in
receipt of revenue data which in many cases result from errors in revenue at a VAT rate of
0%. The errors found are errors of moving fields while entering data (for example, the dealer
number or date was entered in the revenue field). These tests are performed since these few
cases may cause significant errors.
4.3 Imputation of Missing Revenue
In cases where the revenue data are missing, and the dealer was obligated to report but did not,
imputation is performed. The extent of imputed revenue in the data presented in the
publication is negligible.
4.4 Classification of the Sample by Industries
The frame used to create the sample was extracted from the CBS Business Register. In the
Register each dealer is classified by his main activity, by various classification sources.
In certain cases, the dealer’s main activity does not coincide with the activity from which most
of the dealer’s revenue is derived (especially in partnerships), and therefore there may be a
small bias between the various industries.
4.5 Adjustment Method for Rising Prices
The revenue of industries is presented in current prices and percentages of change, each year
compared with the previous one, with adjustment to price indices. The changes in real terms
were made by adjustment based on differential price indices each year, at the level of
( 26 )
divisions, and based on the relative share of those industries in the total revenue in the
industry. The revenue of the industries was adjusted by the price indices detailed below:
Agriculture - by price indices of agricultural output.
Manufacturing - weighted index by weights of the sales to the local market and exports. The
indices used are wholesale price indices of the Manufacturing output to local targets, and the
export price index in NIS.
Electricity and Water Supply - by the average price per kwh, and the water price index in
the Consumer Price Index.
Construction – by index of residential construction inputs and housing prices.
Wholesale Trade – according to foreign trade indices for imports and exports, wage indices,
the price index excluding fruit and vegetables, and the index for prices and maintenance of
private vehicles.
Retail Trade – by the appropriate sections in the Consumer Price Index.
Accommodation Services and Restaurants – by the accommodation services and restaurants
index in the Consumer Price Index.
Transport – by the price index of output in Transport.
Communications – by the price index calculated within the framework of the calculation of
the Communications industry and the postal price index.
Insurance Agents Industry – by the insurance index in the Consumer Price Index.
Real Estate – by the Other Housing Expenditures Index in the Consumer Price Index.
Business and Legal Services – by the Consumer Price Index – General.
Private Education – by the sub-index of the price indices for education, lessons, lectures and
supplementary courses in the Consumer Price Index.
Private Health Services – by the price index of dental care and private health services in the
Consumer Price Index.
Personal Services – by the appropriate services in the Consumer Price Index.
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5. Limitations of the Data
The limitations are divided into three groups:
a.
Sampling errors
b.
Non-sampling errors
c.
Other limitations
a.
Sampling errors
Because the estimates are based on a sample, there is a deviation between the estimates and
the “Census value”, i.e., the data that would have been received in the census. These errors are
called sampling errors. In industries in which there is a large number of dealers who were
sampled by probability, the standard deviation is high, and the data credibility may be
impaired.
b.
Non-sampling errors
1.
Errors in revenue datum
The revenue data at a VAT rate of 0% are not controlled well by VAT, and therefore there are
errors at a rate that varies from year to year.
2.
Errors in industrial classification
These errors harm the quality of the industrial estimates. In this connection, it should again be
mentioned that partnerships that combine activities from various industries make accurate
classification difficult.
In the new sample, all of the classifications were taken from the Business Register, in which
the industries are constantly checked and updated. Therefore the quality of the classification is
better.
c.
Other limitations
Although some of the limitations of the data were mentioned earlier, a summary of the
limitations is presented below.
1. The revenue in this publication is the revenue reported to VAT. In addition, it should be
borne in mind that the revenue reports are affected by the depth and extent of collection by
the VAT authorities and that illegally unreported revenue is not included.
2. In order to calculate accurate revenue estimates, CBS requires revenue reports only.
However, the calculations also include reports which are not directly attributable to the
economic activity of the dealer's industry, such as reports of asset sales. These reports,
which are submitted for purposes of VAT payments, consequentially make it difficult to
calculate exact estimates.
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