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  • Limitations

    The limitations associated with estimation of the alcohol tax gap generally relate to limitations in access and availability of data. Therefore, we are required to make some assumptions as follows:

    • Given the nature of illicit activity, it is inherently difficult to estimate the amount that it contributes to the gap. To overcome this, for
      • large illicit activity – we rely on case data and apply an uplift which is informed by expert judgment
      • small illicit activity – we apply a number of assumptions based on research and some limited data.
       
    • Customs duty paid on alcohol is collected by the Department of Home Affairs. While we are able to use customs data for parts of our estimate, there are still components of the estimate which relate to non-compliance with paying customs duty which we have limited data for. In place of data, we rely on assumptions when forming our estimate.

    Accounting for the shadow economy

    The large illicit and small illicit activity components of unreported tax are attributed to the shadow economy. This captures activity where the participants are deliberately avoiding their obligations to pay duty.

    Table 3 shows the impact of the shadow economy on the gap.

    Table 3: Impacts of the shadow economy on the alcohol tax gap, 2015–16 to 2018–19

    Element

    2015–16

    2016–17

    2017–18

    2018–19

    Small illicit activity

    68

    72

    77

    80

    Large illicit activity

    418

    418

    440

    462

    Amendments for illicit activity

     

     

    44

    46

    Total impact of shadow economy

    486

    489

    561

    588

    Updates and revisions to previous estimates

    Each year we refresh our estimates in line with the annual report. Changes from previously published estimates occur for a variety of reasons, including:

    ■ improvements in methodology

    ■ revisions to data

    ■ additional information becoming available.

    This gap was first published in 2020 and has been revised once on an annual basis. While there has been no change to the methodology, updates to the underlying data have resulted in minor changes to previously published estimates.

    Current and previous net tax gap estimates, 2015–16 to 2018–19

    Figure 2 depicts a graphical representation of the previously published estimates.

    The data is presented in Table 4 below.

    Table 4: Current and previous net alcohol gap estimates, 2015-16 to 2018-19

     

    2015–16

    2016–17

    2017–18

    2018–19

    2020 program (%)

    9.5

    9.6

    9.6

    n/a

    2021 program (%)

    9.0

    9.1

    9.1

    9.0

    See also:

    • Principles and approaches – provides detail on our approach to revisions

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      Last modified: 19 Oct 2021QC 63955