6.4 Estimation methods – provincial and territorial estimates
6.37 Estimates of provincial and local taxes on products and on factors of production as well as provincial and local subsidies are built up by province in the course of preparing national estimates, and pose no problem for provincial accounts.
6.38 Federal government taxes and subsidies on products and on factors of production, on the other hand, must be allocated across provinces and territories.
6.39 Federal taxes less subsidies on factors of production are allocated by province based on the location of production of the industry being taxed or subsidized. For example, employment development subsidies are first allocated across receiving industries and then geographically, using information on the location of production by each industry.
6.40 Taxes less subsidies on products are allocated by province according to the location of production in the case of subsidies and according to the location of final sale in the case of taxes. Therefore, passenger rail subsidies are allocated by passenger-mile travelled and tobacco excise taxes on sales of tobacco products are allocated by province.
6.41 By-province allocation of the Goods and Services Tax is a special case. As discussed previously, calculation of the GST for non-benchmark years and current year quarters is done using a composite indicator and estimator calculated by aggregating the embedded GST included in the value of GDP final demand components. This same procedure is used to allocate the GST by province and territory. Through the benchmarking of GDP components to the provincial Input-Output Tables, control totals are established for each GDP final demand component by province. For non- benchmark years, the by-province estimation of each final demand component includes a value for embedded GST. Aggregating these estimates of embedded GST produces a composite by-province allocator, which is applied to the national total for GST
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