Income redistribution in kind
At this stage of the economic turnover, a part of the resources obtained at the previous stage in the form of disposable income is redistributed between the institutional units, which is carried out on the basis of a special category of transfer operations. Unlike the stage of secondary income distribution, this stage is characterized by a more limited composition of institutional units and types of resources involved in redistribution operations.
Participants in transfer operations at this stage are units belonging to the sector of state institutions, non-profit organizations serving households and the household sector, and the composition of redistributed resources is limited only to the category of social transfers in natural form , which can be provided in the form:
• Individual non-market goods and services provided directly to households by the sector of state institutions and NGOs serving households, free of charge or at prices that are not of economic importance (housing, utilities, health, education, culture, );
• Compensation to households of expenses for the acquisition of similar individual goods and services.
In direct delivery, the relevant goods and services can be produced by institutional units belonging to the sector of government agencies and NPOs serving households, or purchased by government and NPOs serving households from market producers for transfer to households.
The sources of financing for this category of transfers are: taxes, social security funds, public sector and NGO incomes serving households, contributions, donations, etc. Unlike transfers in cash, this group of transfers has more limited opportunities for end use households. The peculiarity of transfers in kind is their target character, which ensures the possibility of effective implementation at the state level of the most important social functions.
The result of the redistribution of revenues at this stage is accumulated resources in the form of adjusted disposable income .
Since the sources of such transfers are the institutional units of the sectors of public institutions and NPOs serving households, and recipients are only the institutional units of the household sector, the results of the reallocation of resources at this stage are of economic importance exclusively for this group of sectors. For the economy as a whole, the total amount of available resources with this relationship remains unchanged.
Using disposable income
This stage of economic turnover reflects the processes associated with the use of accumulated in the previous stage of disposable and adjusted disposable income for the purposes of final consumption and accumulation.
Final consumption as the direction of resource use is fundamentally different from the previously considered consumption patterns reflected in the economic turnover at the stage of production of goods and services in the form of intermediate consumption and consumption of fixed capital .
On economic content, the categories of consumption defined in the SNA assume the exclusion of a part of the resources from further turnover (in the case of final and intermediate consumption) or a decrease in their economic potential or market value (consumption of fixed capital).
In accordance with the SNA, the final consumption entities in the economic turnover are the institutional units that relate only to the sectors of households, government agencies and NPOs serving households.
The corporate sector of the economy does not have final consumption, does not transfer goods and services to the household sector, and therefore does not participate in the allocation of resources at this stage.
For this stage, the differences between the concepts of final consumption expenditure and actual final consumption, which in the SNA also differentiate from the concepts of the acquisition and use of goods and services, and whose content is characterized by a specific specificity for different sectors of the economy, are of fundamental importance.
In the SNA, in general, expenses are defined as the monetary amounts or the value equivalent of other types of resources transferred by the buyer to the seller in exchange for the goods and services provided directly or by other units agreed by the parties . The term & quot; buyer & quot; are understood to be the institutional units that bear the actual final costs associated with the acquisition of goods and services and which may differ from the units making the relevant payments. A typical example of the latter situation is the compensation payments made by institutional units to the household sector for purchased goods and services. In the SNA, such compensatory flows are made by institutional units belonging to the sectors of public institutions and NPOs serving households.
An essential sign of the acquisition of goods and services by institutional units in accordance with the SNA methodology is the transfer of ownership of goods or provision of services to institutional units.
Differences between the costs of goods and services and their purchase for households are determined by the availability of additional resource flows in the form of transfers in kind received by households from the sectors of public institutions and NPOs serving households.
The use of goods and services in the SNA is interpreted as their consumption by institutional units in the production or final consumption. Accordingly, the differences between the categories of acquisition and use are meaningful only for goods that can be stored as inventories before they are used.
For this stage of economic turnover, the reflected resource flows refer only to the category of consumer goods and services , which are defined as goods and services used by households, government sector units and NPOs serving households to meet individual or collective needs.
End-use expenditures of institutional units are classified in the SNA as costs associated with individual and collective consumption in accordance with the principle of financing the corresponding costs. This differentiation of expenditures corresponds to the fundamental differences between individual and collective consumer goods or services recognized in the SNA.
The group individual includes goods and services that are purchased and used by households to meet the needs of their members.
In the SNA, all goods and most of the services rendered are classified as individual.
Individual goods and services, defined in a different terminology as private, in contrast to public goods and services, are characterized by the following features:
- the ability to monitor and record the fact and time of their acquisition by individual households or their members;
- the presence of consent and necessary actions on the part of households aimed at purchasing goods and providing services;
- the purchase of individual goods and services by specific households, individuals or limited groups of individuals excludes their acquisition by other persons or households.
In the SNA the collective principle of use refers only to the category of consumer services - services provided simultaneously to the entire population or to its individual groups. The provision of such services, as a rule, does not require the consent of their consumers and does not limit their accessibility to other persons or groups and categories of the population. In addition, collective services, unlike individual services, can not be attributed to individuals and, accordingly, economically justified tariffs can not be established for them. Accordingly, such services are classified in the SNA as non-market, a the source of their financing are taxes or other incomes of the public sector.
The main types of collective services provided by the state include services related to defense, public security, the content of the public health system, education, environmental protection, the organization of strategic research and development, etc.
Unlike public collective services, the services provided by non-profit organizations serving households are primarily targeted at members of individual groups that control and finance such organizations.
Due to the limited composition of such groups, this category of content services is more in line with the characteristics specific to individual services. Therefore, according to the SNA classification, all services provided by the sector of non-profit organizations serving households are classified as individual.
For the household sector , final consumption expenditure is defined as their expenditure on consumer goods and services.
Given the characteristics of households as a set of units characterized by mixed production and consumer functions, the most difficult question in identifying such expenditures in the SNA is the separation of resource flows used for the production purposes and of the final Therefore, in this part, the relevant provisions of the SNA methodology are predominantly recommendatory.
For example, for households that own unincorporated enterprises, in practice it is rather difficult to divide used goods and services for the purposes of final and intermediate consumption, purchased durable goods (vehicles, computing and household appliances, etc.) for the purposes of the final consumption or accumulation of fixed capital, etc. Household expenditures on final consumption in the SNA include expenditures on the production of goods and services for own consumption, including food and other agricultural products, services produced by owners living in their own homes, home services provided by paid employees, etc.
In addition, the concept of final consumption and related expenditures for households extends to a number of elements in the composition of resource flows formed at other stages of economic turnover. In particular, in accordance with the SNA methodology, final payments to households are based on the natural part of the remuneration paid to employees for the work performed, which is considered to be equivalent to their costs for the purchase of the corresponding goods and services intended for final consumption. Similar principles are used in the SNA and for consumer goods and services received by households by barter operations.
The expenditures of the sector of state institutions on final consumption are related to the expenditures of its institutional units on consumer goods and services. They include expenditures for the production of non-market goods and services for own consumption, as well as costs associated with the acquisition of consumer goods and services from market producers.
As part of the costs of this sector of the economy is also allocated to expenditures for individual households and the society as a whole, which in the terminology of the SNA corresponds to the costs of individual and collective goods and services.
The source of financing of such expenses are tax revenues and other types of income of this sector of the economy.
The basis for differentiating state expenditures on individual goods and services is the classification of general government functions.
In accordance with the provisions of the SNA methodology, all government spending on final consumption, other than the costs associated with the implementation of national functions (general government, regulation, research, etc.), are considered as expenses for individual goods and services . The directions of such expenditures are: the sphere of education, health, social welfare, culture, etc.
The final consumption expenditure of NPOs , serving households, are generally similar in content and interpretation to the corresponding expenditures of the public sector sector, with the exception of funding sources, for which NPOs are membership fees , deductions or subsidies. In addition, in the SNA, all costs of NPOs serving households are treated as expenses for individual goods and services.
The general result of this stage of economic turnover is the formation of residual resources in institutional units of savings , representing some of their disposable income, used for end-use purposes.
A special element taken into account at this stage as a result of the process of reallocation of resources between households and pension funds is the so-called adjustment to the net asset value in pension funds. The content of this element is determined by the direction of the resulting flow in the form of allocations of households to pension funds and benefits received from pension funds. Due to the fact that the funds of pension funds in the SNA are considered as property of households, the result of the redistribution of resources between this sector of the economy and pension funds, determined by a change in the net asset value in pension funds, reflects an additional part of the savings formed households.
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