Derek McDowell
Question:8 Mr. McDowell asked the Taoiseach the allowance, if any, made for income generated in the black market in calculating gross national domestic income; and if he will make a statement on the matter. [13848/99]
Ceisteanna–Questions. - National Income Estimates.
In compiling the national income estimates, the CSO aims to ensure all aspects of relevant economic activity are covered. To do this it assesses the reliability and comprehensiveness of the basic data sources and, where necessary, makes upward adjustments to capture income not adequately covered. The extent and nature of these adjustments vary depending on the components of gross domestic produce involved. For example, in the case of farm income the initial estimate is thought to be comprehensive and no upward adjustment is made. It is calculated as the difference between total agriculture output and inputs and is not based on individual farmers' returns.
In the case of wages and salaries, the basic data sources are statistical surveys. The results are then grossed up to a control total based on the number of employees in the Quarterly National Household Survey, whether part-time, full-time, in second jobs, seasonal workers and so on. This ensures an income is applied to all employees economically active in the State.
However, for other estimates, such as self-employed profits, where the primary data source is income tax declarations, specific adjustments are made. For example, profits are attributed to those not captured in the tax system by adjusting upwards to the numbers in the Quarterly National Household Survey and an allowance is then made for under reporting of profits by making an uplift to the basic income declared.
The CSO tries to ensure that all relevant incomes are captured in its estimates of national income. In accordance with European standards, income arising from illegal production activities, such as drug dealing, is not included in the national accounts. The compilation system does not itself provide a direct measure of the black economy. To do this the tax collection system would need to be the starting point for measuring all components of gross domestic product. This is not the case. Consequently, such black market activities cannot be separately evaluated. The adjustment made, however, while not amounting to a measure of the black economy amounts to 2.5 per cent of gross domestic product.