There are limitations with the Australian Petroleum Statistics sales data as a measure of consumption, as it is compiled from a voluntary survey. Errors in this data will contribute to a margin of error in the petroleum excise gap. There may be coverage errors (where not all transactions are reported), as well as classification errors – for example, oil may not be correctly reported as ‘fuel oil’ or ‘heating oil’.
The benchmark data needs to be adjusted, by subtracting the quantity consumed that is not subject to excise or duty. Determining a correction factor to adjust for consumption not subject to excise or duty involves an estimation process which contributes to the margin of error in the gap. Inventory data in the Australian Petroleum Statistics are reported in tonnes, and conversion to volume using an average density figure may introduce additional error.
The Australian Petroleum Statistics are subject to revisions which can lead to changes in the size of the estimated gap for specific petroleum products. A substantial revision could result in changes to the size of the estimated petroleum revenue gap.
Differences can arise between when product sales data is reported to the Department of Industry, Innovation and Science for compilation in the Australian Petroleum Statistics and when the excise clearance data enters ATO systems.
We have rounded the excise revenue gap to $0 for the 2011–12 estimate, as the raw number produced a small negative gap. In the context of tax gap estimation, it is highly unlikely that the gap would be negative. This could occur if there had been systematic over-compliance or where unintentional errors in compliance are randomly distributed around the expected liability across years. In this instance, we consider that the small negative gap resulted from data issues rather than over-compliance.