Factor Capital

The 2012 gross operating surplus in Chiapas is estimated as a residual because of the lack of data on the subject. Therefore, it is obtained by subtracting formal and informal wages and salaries, labor, payroll, and activity taxes, and subsidies on production, from the Chiapas GDP-Value added at basic prices by economic activity. It is important to point out that the 2009 Chiapas Economic Census contains data on gross capital formation, however, such data is ruled out because the reported values are incomplete due to the fact that such census is focused only on formal economic units and data do not cover the base-year of this study.

4.2.5. Labor Tax

Social security contributions (or labor taxes) paid by economic activities are first estimated at the national level because of lack of reliable data at the regional level. The 2003-2012 Goods and Services Accounts provide data on salaried remuneration in a consolidated account. However, such account includes wages and salaries aggregated with social security contributions. Hence, as a first step, contributions and wages and salaries are disaggregated. This can be done because the total value of contributions is given and it is assumed that contributions across sectors have the same shares observed in wages and salaries. Once national contributions are obtained by economic activity, contributions in Chiapas are derived by dividing national contributions by the national GDP-Value-added at basic prices and then multiplying them by the Chiapas GDP-Value-added at basic prices. Finally, regional contributions by economic activity are adjusted to an estimated plausible total level of three billion Mexican pesos, a level that accounts for 11% of total remuneration as observed at the national level. Table 4.10 shows the vector of national labor tax constructed with the 2003- 2012 Goods and Services Accounts of the System of National Accounts used to estimate the regional labor tax by economic activity.

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4.2.6. Activity Tax

Because of the lack of regional data with regard to activity taxes by economic activity, this account is derived from national data on the subject. The national activity tax is obtained from the account called “Otros impuestos sobre la producción netos” included in the 2003- 2012 Goods and Services Accounts of the System of National Accounts published by the National Institute of Geography and Statistics (INEGI). With such account at hand, regional activity taxes by economic activity are estimated by dividing national activity taxes by national GDP-Value-added at basic prices and then multiplying them by Chiapas GDP-Value- added at basic prices. Table 4.11 shows the vector of the national activity tax by economic activity used to estimate the respective account for Chiapas.

It is important to highlight that prior to estimating activity taxes, these data were officially requested from the national and regional governments through the System of Transparency to access public information, however, no information was provided.

4.2.7. Payroll Tax

The payroll tax is administered at the regional level and, consequently, its rate varies from state to state. It represents an important source of own-revenue for subnational governments. In Chiapas the current payroll tax rate is 2%, according to the 2012 Revenue Law of Chiapas. Unfortunately, there is not any available public record at the regional level about this tax disaggregated by economic activity using the NAICS classification applied by the System of National Accounts. Therefore, this account is estimated by multiplying the payroll tax rate by gross formal wages and salaries by economic activity.

4.2.8. Subsidies on Production

Subsidies on production by economic activity are derived from national data because of the lack of information at the regional level. The 2008 Input-Output Supply and Use tables from

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the System of National Accounts include data on subsidies on production by economic activity. Such information is updated to 2012 using the aggregate value reported in the 2003- 2012 Goods and Services Accounts. It is known that total subsidies on production in 2012 accounted for $4.73 billion Mexican pesos. The latter value is used as control total to update the data by economic activity assuming fixed coefficients. According to National Accounts, the only economic activity that gets subsidies is transport, which in this studyis aggregated with trade. Once national subsidies on production are updated, the regional account is estimated by dividing national subsidies by national GDP-Value-added at basic prices and then multiplying them by Chiapas GDP-Value-added at basic prices. Table 4.12 shows the vector with national subsidies used to estimate the regional account.

As in the case of activity taxes, a request for information was submitted to national and regional governments through the System of Transparency to get these data by economic activity. However, no information was provided.

4.2.9. Gross Output

The 2012 gross output in Chiapas is obtained by adding up intermediate demand; factors of production (formal and informal labor, as well as gross operating surplus); labor, payroll, and activity taxes, and subsidies on production. The 2009 Economic Census contains data on gross product in Chiapas, however, such information is ruled out because it is focused on formal economic units. In other words, it is not an account with complete data on the subject to reflect the real gross output of the region. In addition, it is not updated to 2012, the base-year of this research.

4.2.10. Domestic Supply

Domestic supply by economic activity at the regional level is derived from national data because there is no disaggregated information on this account. Hence, the 2008 National

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Supply Matrix is updated assuming fixed proportions and using the 2012 national gross output as a column control account. The updated domestic supply matrix is focused on the primary activities. In other words, it is a diagonal matrix, that is, data on the main diagonal is about primary activities while entries outside such diagonal are all zero. Once the 2012 National Supply Matrix is estimated, Chiapas’ domestic supply is derived as a sub-matrix assuming that input proportions between different economic sectors are fixed (Leontief coefficients), and by dividing national domestic supply by national GDP-Value-added at basic prices and then multiplying by Chiapas GDP-Valued-added at basic prices. This procedure is followed for each economic activity. Table 4.13 shows the national domestic supply used to estimate the regional account.

The main sources of data are the 2008 National Supply Matrix of the Input-Output Table, and the 2003-2012 Goods and Services Accounts of the System of National Accounts.

4.2.11. Transaction Costs

Transaction costs for Chiapas are derived from national figures assuming fixed input proportions. At the national level transaction costs for 2012 are estimated updating trade and transportation margins (domestic, export and import margins) from the 2008 Input- Output Matrix using control-total accounts published by the System of National Accounts. Hence, at the regional level, domestic, export and import trade and transportations margins are estimated by dividing national margins by national GDP-Value-added at basic prices and

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multiplied by Chiapas GDP-Value-added at basic prices. This procedure is applied for each economic activity.

Transaction costs are expenditures for agricultural, mining, utilities, and manufacturing commodities whereas they constitute revenue for the trade and transport account (C_TRDE). The main sources of data are the 2008 Input-Output Matrix and the 2003-2012 Goods and Services Accounts of the System of National Accounts.

4.2.12. Indirect Taxes

Indirect taxes are composed of value-added, sales and export taxes, along with import tariffs. Because of lack of data on these taxes at the regional level, they have to be estimated. The value-added tax (VAT), on the one hand, is derived from national data by multiplying the national VAT revenue by the national GDP-Value-added at basic prices and multiplying by the Chiapas GDP-Value-added at basic prices by economic activity. The estimation of VAT is net of subsidies. On the other hand, the sales tax account at the regional level is derived from a national account called “Otros impuestos a los bienes y servicios” from the 2003-2012 Goods and Services Accounts of the System of National Accounts. Such account is divided by national GDP-Value-added at basic prices and then multiplied by Chiapas GDP-Value-added at basic prices by economic activity.

With respect to import tariffs, they are estimated derived from national data by dividing national import tariffs by national GDP-Value-added at basic prices and then multiplying by Chiapas GDP-Value-added at basic prices. It is done this way because of lack of data at the regional level. In contrast, the current export tax rate is zero; therefore its account shows a value of zero in the SAM. Table 4.14 shows all national indirect taxes used to estimate their regional accounts.

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4.2.13. Imports

Regional imports are derived from national figures due to lack of public data on this topic as well. As a first step, the 2012 national imports by economic activity are obtained from the 2003-2012 Goods and Services Accounts. These data are available on-line in the website of the National Institute of Geography and Statistics (INEGI) at: http://bit.ly/1jBQ3Cq. Subsequently, imports in Chiapas are estimated by dividing national imports by national GDP-Value-added at basic prices andthen multiplying by Chiapas GDP-Value-added at basic prices. They are then adjusted so that total supply equals total demand in the SAM. This procedure is carried out by economic activity. In this case fixed proportions across sectors are assumed as well. Table 4.15 shows the vector of national imports used to estimate the regional account.