Add consumer and capital incidence of employer NI (#969)

* Fix Automatically apportion remaining employer NI response to consumption #968

* Versioning

* Fix parameter labels

* Add government balance/tax/spend variables

CHANGELOG.md

@@ -5,6 +5,12 @@ All notable changes to this project will be documented in this file.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/), 
 and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [2.7.0] - 2024-10-21 10:09:01
+
+### Added
+
+- Automatic allocation of post-employee-incidence employee to households (consumers/capital).
+
 ## [2.6.0] - 2024-10-19 19:58:09
 
 ### Fixed
@@ -1518,6 +1524,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 
 
+[2.7.0]: https://github.com/PolicyEngine/openfisca-uk/compare/2.6.0...2.7.0
 [2.6.0]: https://github.com/PolicyEngine/openfisca-uk/compare/2.5.0...2.6.0
 [2.5.0]: https://github.com/PolicyEngine/openfisca-uk/compare/2.4.0...2.5.0
 [2.4.0]: https://github.com/PolicyEngine/openfisca-uk/compare/2.3.0...2.4.0

changelog.yaml

@@ -1274,3 +1274,8 @@
     fixed:
     - Bug in budget change reforms.
   date: 2024-10-19 19:58:09
+- bump: minor
+  changes:
+    added:
+    - Automatic allocation of post-employee-incidence employee to households (consumers/capital).
+  date: 2024-10-21 10:09:01

policyengine_uk/parameters/gov/contrib/policyengine/employer_ni/capital_incidence.yaml

@@ -0,0 +1,6 @@
+description: Fraction of (remaining after employee incidence) employer NI that is borne by capital.
+values:
+  2010-01-01: 0.5
+metadata:
+  label: Employer NI capital incidence
+  unit: /1

policyengine_uk/parameters/gov/contrib/policyengine/employer_ni/consumer_incidence.yaml

@@ -0,0 +1,6 @@
+description: Fraction of (remaining after employee incidence) employer NI that is borne by consumers.
+values:
+  2010-01-01: 0.5
+metadata:
+  label: Employer NI consumer incidence
+  unit: /1

policyengine_uk/parameters/gov/contrib/policyengine/employer_ni/employee_incidence.yaml

@@ -1,4 +1,4 @@
-description: Fraction of employer NI that is borne by employees. The remaining is passed onto prices.
+description: Fraction of employer NI that is borne by employees.
 values:
   2010-01-01: 1
 metadata:

policyengine_uk/variables/contrib/policyengine/employer_ni/employer_ni_fixed_employer_cost_change.py

@@ -9,8 +9,200 @@ class employer_cost(Variable):
     unit = GBP
 
     def formula(person, period, parameters):
-        return person("employment_income", period) + person(
-            "ni_employer", period
+        benefits = add(
+            person,
+            period,
+            [
+                "household_statutory_sick_pay",
+                "household_statutory_maternity_pay",
+                "household_statutory_paternity_pay",
+            ],
+        )
+        return (
+            person("employment_income", period)
+            + person("ni_employer", period)
+            + person("employer_pension_contributions", period)
+            + benefits
+        )
+
+
+class baseline_employer_cost(Variable):
+    label = "baseline employer cost"
+    entity = Person
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+
+    def formula(person, period, parameters):
+        prior_employment_income = person(
+            "employment_income_before_lsr", period
+        )
+        employment_income_behavioral_response = person(
+            "employment_income_behavioral_response", period
+        )
+        benefits = add(
+            person,
+            period,
+            [
+                "household_statutory_sick_pay",
+                "household_statutory_maternity_pay",
+                "household_statutory_paternity_pay",
+            ],
+        )
+        employer_pension_contributions = person(
+            "employer_pension_contributions", period
+        )
+        ni_class_1_income = (
+            prior_employment_income
+            + employment_income_behavioral_response
+            + benefits
+            + employer_pension_contributions
+        )
+
+        # Calculate baseline employer cost
+        baseline_parameters = parameters(period).baseline
+        baseline_class_1 = (
+            baseline_parameters.gov.hmrc.national_insurance.class_1
+        )
+        r_b = baseline_class_1.rates.employer
+        t_b = baseline_class_1.thresholds.secondary_threshold * WEEKS_IN_YEAR
+        p_b = (
+            baseline_parameters.gov.contrib.policyengine.employer_ni.exempt_employer_pension_contributions
+        )
+        pen_con_subtracted_b = employer_pension_contributions
+        if p_b:
+            pen_con_subtracted_b = employer_pension_contributions
+        else:
+            pen_con_subtracted_b = 0
+
+        baseline_employer_ni = r_b * max_(
+            0, ni_class_1_income - pen_con_subtracted_b - t_b
+        )
+        return ni_class_1_income + baseline_employer_ni
+
+
+class adjusted_employer_cost(Variable):
+    label = "employer cost"
+    entity = Person
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+
+    def formula(person, period, parameters):
+        employment_income = person("employment_income", period)
+        benefits = add(
+            person,
+            period,
+            [
+                "household_statutory_sick_pay",
+                "household_statutory_maternity_pay",
+                "household_statutory_paternity_pay",
+            ],
+        )
+        employer_pension_contributions = person(
+            "employer_pension_contributions", period
+        )
+        ni_class_1_income = (
+            employment_income + benefits + employer_pension_contributions
+        )
+
+        # Calculate employer cost
+        parameters = parameters(period)
+        class_1 = parameters.gov.hmrc.national_insurance.class_1
+        r_r = class_1.rates.employer
+        t_r = class_1.thresholds.secondary_threshold * WEEKS_IN_YEAR
+        p_r = (
+            parameters.gov.contrib.policyengine.employer_ni.exempt_employer_pension_contributions
+        )
+        pen_con_subtracted_r = employer_pension_contributions
+        if p_r:
+            pen_con_subtracted_r = employer_pension_contributions
+        else:
+            pen_con_subtracted_r = 0
+
+        employer_ni = r_r * max_(
+            0, ni_class_1_income - pen_con_subtracted_r - t_r
+        )
+        return ni_class_1_income + employer_ni
+
+
+class employer_ni_response_consumer_incidence(Variable):
+    label = "price response to employer NI reform"
+    entity = Person
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+
+    def formula(person, period, parameters):
+        consumer_incidence = parameters(
+            period
+        ).gov.contrib.policyengine.employer_ni.consumer_incidence
+        if consumer_incidence == 0:
+            return 0
+
+        if not hasattr(person.simulation, "dataset"):
+            # In single-household simulations, we can't automatically put revenue into price increases because we don't know the revenue.
+            return 0
+
+        person_weight = person("person_weight", period)
+        baseline_employer_cost = person("baseline_employer_cost", period)
+        employer_cost = person("adjusted_employer_cost", period)
+        change_in_employer_cost = employer_cost - baseline_employer_cost
+        amount_paid_by_employers = (
+            person_weight * change_in_employer_cost
+        ).sum()
+
+        consumption = (
+            person.household("consumption", period)
+            / person.household.nb_persons()
+        )
+        total_consumption = (consumption * person_weight).sum()
+        share_of_total_consumption = consumption / total_consumption
+
+        return (
+            amount_paid_by_employers
+            * share_of_total_consumption
+            * consumer_incidence
+        )
+
+
+class employer_ni_response_capital_incidence(Variable):
+    label = "capital response to employer NI reform"
+    entity = Person
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+
+    def formula(person, period, parameters):
+        capital_incidence = parameters(
+            period
+        ).gov.contrib.policyengine.employer_ni.capital_incidence
+        if capital_incidence == 0:
+            return 0
+
+        if not hasattr(person.simulation, "dataset"):
+            # In single-household simulations, we can't automatically put revenue into price increases because we don't know the revenue.
+            return 0
+
+        person_weight = person("person_weight", period)
+        baseline_employer_cost = person("baseline_employer_cost", period)
+        employer_cost = person("adjusted_employer_cost", period)
+        change_in_employer_cost = employer_cost - baseline_employer_cost
+        amount_paid_by_employers = (
+            person_weight * change_in_employer_cost
+        ).sum()
+
+        wealth = (
+            person.household("corporate_wealth", period)
+            / person.household.nb_persons()
+        )
+        total_wealth = (wealth * person_weight).sum()
+        share_of_total_wealth = wealth / total_wealth
+
+        return (
+            amount_paid_by_employers
+            * share_of_total_wealth
+            * capital_incidence
         )
 
 

policyengine_uk/variables/gov/gov_balance.py

@@ -0,0 +1,12 @@
+from policyengine_uk.model_api import *
+
+
+class gov_balance(Variable):
+    label = "government balance"
+    documentation = "Government deficit impact in respect of this household."
+    entity = Household
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+    adds = ["gov_tax"]
+    subtracts = ["gov_spending"]

policyengine_uk/variables/gov/gov_spending.py

@@ -0,0 +1,46 @@
+from policyengine_uk.model_api import *
+
+
+class gov_spending(Variable):
+    label = "government spending"
+    documentation = "Government spending impact in respect of this household."
+    entity = Household
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+    adds = [
+        "child_benefit",
+        "esa_income",
+        "esa_contrib",
+        "housing_benefit",
+        "income_support",
+        "jsa_income",
+        "jsa_contrib",
+        "pension_credit",
+        "universal_credit",
+        "working_tax_credit",
+        "child_tax_credit",
+        "attendance_allowance",
+        "afcs",
+        "bsp",
+        "carers_allowance",
+        "dla",
+        "iidb",
+        "incapacity_benefit",
+        "jsa_contrib",
+        "pip",
+        "sda",
+        "state_pension",
+        "maternity_allowance",
+        "statutory_sick_pay",
+        "statutory_maternity_pay",
+        "ssmg",
+        "basic_income",
+        "epg_subsidy",
+        "cost_of_living_support_payment",
+        "energy_bills_rebate",
+        "winter_fuel_allowance",
+        "nhs_budget_change",
+        "education_budget_change",
+        "other_public_spending_budget_change",
+    ]

policyengine_uk/variables/gov/gov_tax.py

@@ -0,0 +1,36 @@
+from policyengine_uk.model_api import *
+
+
+class gov_tax(Variable):
+    label = "government tax revenue"
+    documentation = (
+        "Government tax revenue impact in respect of this household."
+    )
+    entity = Household
+    definition_period = YEAR
+    value_type = float
+    unit = GBP
+    adds = [
+        "expected_sdlt",
+        "expected_ltt",
+        "expected_lbtt",
+        "corporate_sdlt",
+        "business_rates",
+        "council_tax",
+        "domestic_rates",
+        "fuel_duty",
+        "tv_licence",
+        "wealth_tax",
+        "non_primary_residence_wealth_tax",
+        "income_tax",
+        "national_insurance",
+        "LVT",
+        "carbon_tax",
+        "vat_change",
+        "capital_gains_tax",
+        "private_school_vat",
+        "corporate_incident_tax_revenue_change",
+        "consumer_incident_tax_revenue_change",
+        "high_income_incident_tax_change",
+        "ni_employer",
+    ]

policyengine_uk/variables/gov/hmrc/tax.py

@@ -40,6 +40,8 @@ class household_tax(Variable):
         "corporate_incident_tax_revenue_change",
         "consumer_incident_tax_revenue_change",
         "high_income_incident_tax_change",
+        "employer_ni_response_capital_incidence",
+        "employer_ni_response_consumer_incidence",
     ]
 
     def formula(household, period, parameters):

policyengine_uk/variables/household/demographic/household.py

@@ -37,6 +37,7 @@ class household_weight(Variable):
     label = "Weight factor for the household"
     definition_period = YEAR
     uprating = "gov.ons.population"
+    default_value = 1
 
 
 class Country(Enum):

policyengine_uk/variables/household/income/income.py

@@ -165,7 +165,6 @@ class hbai_household_net_income(Variable):
         "statutory_maternity_pay",
         "ssmg",
         "basic_income",
-        "epg_subsidy",
         "cost_of_living_support_payment",
         "winter_fuel_allowance",
     ]

setup.py

@@ -4,7 +4,7 @@
 
 setup(
     name="PolicyEngine-UK",
-    version="2.6.0",
+    version="2.7.0",
     author="PolicyEngine",
     author_email="nikhil@policyengine.org",
     classifiers=[