A new research project on economic fluctuations, business demography and tax revenue collected from New Zealand businesses, will investigate how local businesses’ life cycles and taxable revenue are affected by changes in economic environment.
The project is a joint research initiative that will enhance research collaboration between Inland Revenue, Treasury, and Statistics NZ. It is funded by the Official Statistics Research programme. The major data source for the analysis is official statistics data collected within the prototype Longitudinal Business Database (LBD) developed by Statistics NZ.
Dr. Michael Slyuzberg, the Lead Researcher from Inland Revenue, says that the project seeks to build Treasury and Inland Revenue’s evidence base and research capability in relation to tax policy advice. It also aims to gain a better understanding of the dynamics of business performance and the determinants of tax revenue collected from New Zealand businesses.
“The research will demonstrate the usefulness of official statistics, and LBD in particular, for providing decision support and policy advice to the government. The LBD, which augments tax administrative data with survey data, offers vast amounts of information necessary to model business taxpayers’ behaviour,” said Michael.
“The project also aims to transfer knowledge to Statistics New Zealand around analytical techniques and best practice for making optimum use of a prototype Longitudinal Business Database.”
Michael believes that the project is highly relevant for the Official Statistics System as it will lead to an improvement in the use of official statistics data. It will also expand the usage of statistical methods in Treasury and Inland Revenue to support evidence-based decision-making.
The research, a good example of cross-government cooperation, will take a year and intends to analyse life cycles of New Zealand businesses, which is very important for ongoing research around the dynamics of business performance. It will also assist the development of an econometric model to assess the impact of economic fluctuations on business revenue – an extremely useful tool for advanced forecasting.