ISRAEL: Estimates of Expenditures of Israeli Households for On-Line Purchases from Abroad
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- ISRAEL: Estimates of Expenditures of Israeli Households for On-Line Purchases from Abroad
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Introduction and scope
- Recent years show a substantial increase in on-line purchases by Israeli consumers from commercial sites abroad.
- Historical personal imports included:
- Israelis personally importing products.
- Israeli citizens returning from an extended stay abroad.
- New immigrants bringing personal imports.
- These personal imports were recorded under "household consumption" as "personal imports of goods" (goods purchased abroad by Israelis without importers or merchants as intermediaries).
Data sources and compilation practices
- Primary source: administrative file that the CBS receives from the customs authorities containing data on all goods imported to Israel.
- Recognized limitation: customs data do not fully reflect the scope of smaller on-line purchases.
- Estimation basis: credit card companies' reports on on-line purchases from commercial sites abroad.
- Credit card data specifics:
- Data relate only to households; business credit cards are excluded.
- Transactions are classified according to Merchant Category Codes (MCC).
- The same definitions were established for all three credit card companies.
- Companies provide m$onthly or quarterly data approximately two weeks after the end of the quarter.
- Duty-rate reporting request to credit card companies used the customs authorities’ duty-rate brackets:
- $0-75 – Products in this price range (except for alcohol and tobacco products) are exempt from customs import duty as well as from Value Added Tax and purchase tax.
- $75-$500 – Products in this price range are exempt from customs duty only, and are subject to VAT and purchase tax.
- $500-$1,000 – Products in this price range are subject to VAT, customs duty, and purchase tax.
- $1,000 and more – Products worth $1,000 and more or consignments of tobacco, cigarettes, alcohol and alcoholic beverages are subject to VAT, customs duty, and purchase tax as paid by commercial importers.
- Purpose of duty-rate classification: distinguish goods that cleared customs (already included in household consumption expenditures) to avoid double counting.
- Coverage decision: regarding expenditures for on-line purchases abroad, data will apply only to the first two levels, i.e., to purchases up to $500.
Classification and mapping
- Every industry in the MCC was classified for mapping to national accounts categories.
- An index was prepared to convert MCC industries to the industrial classification of household consumption expenditure at the CBS, based on the ISIC (International Standard Classification of All Economic Activities), Rev. 4.
- Noted classification challenge: MCC is organized according to businesses rather than by type of good or service, complicating mapping to goods-by-industry categories.
Treatment in macroeconomic statistics
- The estimation of on-line purchases is included in the balance of payments under the goods account.
- The addition is included in private consumption expenditure on industrial goods in the National Accounts.
- The estimates are also used for adjustments to import in the balance sheets.
Current challenges and conclusions
- Present focus is only on goods purchased by Israelis from internet sites abroad; other cross-border purchase channels are not addressed here.
- Goods by industry classification have not yet been published.
- Ongoing task: determine how to classify MCC-based transactions into goods-by-industry categories due to mismatches between MCC business-based divisions and goods/services types.
References