6425.0 - Information Paper: Price Indexes and The New Tax System, 2000
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/05/2000
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ABS Introduces New CPI Series
As part of its program of periodic revisions to price indexes, the ABS announced today that it will introduce the 14th series of the Consumer Price Index from September quarter 2000. These changes are being made to maintain the accuracy of the CPI.
The new series, fully detailed in the Information Paper: Price Indexes and The New Tax System (cat. no. 6425.0) published today by the Bureau, will enable up to date household expenditure patterns to be reflected in the CPI.
The Acting Australian Statistician, Mr Dennis Trewin, said the 14th series would also introduce a new commodity classification, based on an international standard.
"This is necessary because there will be some substitution in expenditure between commodities as a result of tax reforms," he said. "Substitution towards relatively cheaper goods and services can result in an upward bias of the CPI but the new commodity classification will reduce the risk of substitution bias by including substitutable goods in the same commodity class. For example, fresh and processed fruit and vegetables will now be included in the same commodity class."
Subject to further evaluation, the ABS will also introduce a new financial services group to the CPI. The introduction of the financial services group would mean that direct and indirect fees (such as interest rate margins) charged to consumers on deposit and loan facilities will be included in the CPI for the first time.
Commenting on the changes Mr Trewin said the ABS would be the first of the world's national statistical agencies to introduce these items to the CPI.
"Given this, and the complexity of the task, financial services may initially be released as an experimental series to supplement the CPI rather than be included in the CPI itself," he said. "A decision will be announced within the next few months."
In the publication ABS notes that June quarter 2000 will be the 'link quarter'. This means that price changes resulting from tax reform changes on 1 July will be reflected in the September quarter 2000 CPI and not be distorted by the introduction of the 14th series.
Full details are in the Information Paper: Price Indexes and The New Tax System released today. The document may be found on the ABS website www.abs.gov.au. Today's release follows the publication of a related paper last week ABS Statistics and The New Tax System (cat. no. 1358.0). If you wish to purchase a copy of this publication, contact the ABS Bookshop in your capital city.
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