Secondary income distribution
This stage of economic turnover reflects the processes of redistribution of primary incomes between institutional units associated with operations of resource exchange.
The main elements determining the content and structure of exchange transactions are transfers , which are generally defined in the SNA as transfers of goods, services or assets between institutional units on nonequivalent conditions. At the stage of income distribution in question, such transactions refer only to current transfers, represented in cash and in kind.
In accordance with the SNA methodology, current transfers should be distinguished from capital transfers that have fundamentally different economic content and reflect the processes of changing non-financial and financial assets that are accounted for at other stages of economic turnover.
Unlike the current capital transfers are related:
- for capital transfers in kind - with the receipt or transfer by the institutional units of ownership rights to a particular type of asset (other than cash and inventory), and the settlement of their mutual obligations for arrears ;
- for capital transfers in cash - with the transfer of financial resources for the purpose of acquiring assets (except MOA).
In addition, features of capital transfers, unlike current transfers, are such characteristics as scale and irregularity.
In the current transfers, the following main elements are distinguished:
- current taxes on income, wealth, etc.;
- social deductions;
- social benefits other than social transfers in kind;
- other current transfers.
Current taxes on income, wealth, etc. are composed of income taxes and other current taxes that are levied on the incomes and wealth of institutional units. This type of taxes is mainly allocated to the actual or expected incomes of corporations and households. In some cases, such taxes can be paid by units related to the sector of state institutions and non-profit organizations, as well as by non-resident units.
The income taxes included in consist of taxes on income, profits and capital gains of institutional units as a result of price changes. This type of taxes mainly applies to actual sludge and expected revenues of corporations, non-profit organizations and households. In some cases, the estimated base for their determination may also be indirect estimates of the incomes of institutional units from the use of property, land and real estate.
Other current taxes include:
- current taxes on capital;
- other current taxes.
Current capital taxes consist of property taxes or the net value of the wealth of institutional units that are paid periodically (usually once a year). They include taxes on land or other assets owned by enterprises or leased and used by them for production and considered in accordance with the SNA methodology as other taxes on production.
The most common types of other current taxes are poll taxes paid by individuals or households regardless of their income or wealth, taxes on expenses paid in accordance with total expenses by individual individuals or households household payments for certain types of licenses, taxes on financial transactions, stamp duties, etc.The composition of social deductions and benefits as an element of current transfers accounted for at the stage of secondary income distribution is determined by the structure of the social insurance system adopted in economically developed countries and summarized in the SNA in accordance with various goals, tasks and directions of using economic resources in the implementation of general state social policy.
Individual programs organized within the framework of the general system of social insurance have, as a rule, common goals and tasks related to the provision of social protection for different groups and categories of the population, when it is necessary to obtain medical assistance, dependents, due to lower incomes as a result of reductions, retirement, involuntary unemployment, sickness, injuries, death of the main breadwinner, etc.), if it is necessary to provide housing or cover the cost of education.
The peculiarities of the social insurance systems used are determined by the scale of the respective programs and the contingent they cover. In the SNA, such programs are conventionally classified according to the following scheme:
- Social security programs that cover the entire population or its individual groups, usually organized, controlled and funded by the state;
- Private insurance programs organized in the form of special funds managed by insurance companies and non-government pension funds, representing independent institutional units, separated from the relevant groups of employers and employees;
- private insurance programs organized by employers in the form of special reserve funds;
- insurance programs organized by employers without the formation of special reserve funds.
In most countries of the world, social security programs are the most important element of the social insurance system. The funds formed for these purposes are considered as independent institutional units, organized and managed separately from other state funds. The sources of the formation of their resources are the deductions of individuals and employers on behalf of employees, as well as transfers received from public funds.
The main sources of the formation of resources for the implementation of social insurance programs are social contributions made by employers on behalf of hired workers, directly by employees, self-employed persons and persons not engaged in productive activities.
In accordance with the SNA, such transfers can be carried out in the form of actual or imputed social contributions. The last type of transfers to the SNA is considered as a conditional economic operation when employers use social insurance schemes at enterprises without creating special funds. Unlike other schemes in this case, payments of social benefits to hired workers, former employees of enterprises or their dependents are carried out directly by employers from their own resources, the formation of which is not associated with the corresponding social deductions. Therefore, the concept of imputed social contributions is used exclusively to bring this scheme in line with the methodological principles adopted in the SNA to reflect the economic processes underlying the functioning of the social insurance system.
As part of the actual deductions at the stage of secondary income distribution, allocations made by the relevant persons on the mandatory and voluntary basis are allocated as structural elements.
For this group of transfers, the secondary distribution reflects resource flows from the institutional units of the household sector to units belonging to other sectors of the economy whose composition is determined by the characteristics of the existing social insurance system.
The general scheme for classifying the types of social contributions reflected in the secondary income distribution in the SNA is shown in Fig. 4.4.
Payments of social benefits in the secondary distribution of income are transfers (other than social transfers in kind) in the form of reverse flows of resources directed from sectors that receive social contributions or use their own resources for these purposes, to sector of households.
In general, the SNA recognizes the existence of two types of social benefits:
• for social insurance;
• in the form of social assistance.
In addition, in accordance with the forms of payment used, social benefits are allocated:
Fig. 4.4. Scheme of classification of types of social contributions in accordance with the SNA
• in the form of money;
• natural form.
An obligatory condition for receiving social insurance benefits is participation in special programs (including programs financed from social security funds), in contrast to social assistance benefits, the rights to which can be extended to groups of people not participating in this type of programs.
In accordance with the methodology of the SNA, the following set of social benefits are allotted:
• cash benefits paid under social insurance programs from social security funds organized by government agencies and non-profit organizations serving households;
• benefits in cash and in kind, paid for all types of private social insurance programs (with and without the formation of relevant funds);
• benefits in cash in the form of social assistance.Social security sources are the sources of social security benefits as a form of social insurance benefits. In the SNA, taking into account the specifics of the organization of the system of nationwide social insurance in different countries of the world, the following basic types of social benefits in cash paid to their social security funds:
• sickness and disability benefits;
• Maternity benefits;
• children's, family allowances and allowances for other dependents;
• Unemployment benefits
• old-age and survivor benefits;
• Death benefits;
• Other benefits.
Benefits for private social insurance programs for the formation of special funds are paid to households that have the right to receive them in accordance with the terms of the programs being implemented. As a rule, in this case, programs provide for the payment of types of benefits similar to benefits provided from social security funds. Sources of such payments are the funds of insurance companies, pension funds and special insurance funds, organized and managed by institutional units.
Social insurance benefits from sources not related to the formation of special funds are paid by employers to employees, their dependents and persons who lost their bread-winners. They include: payment of wages (ordinary or reduced) for the period of absence from work due to illness, accidents, etc., payment of children's and family benefits, payment of pensions and old age or pensions to former workers, their relatives in connection with the loss of the bread-winner, payment of medical services, payment of stay in medical, rehabilitation and social institutions, etc.
Benefits in the form of social assistance as a kind of current transfers reflected at this stage are paid to households by the sector of state institutions and NGOs serving households. Their payments are made in the absence of programs in the general social insurance system that provide insurance for certain unforeseen events, limited participation of households in existing social insurance programs or insufficient funds paid in the form of social insurance benefits.
Benefits in the form of social assistance do not include benefits paid to their social security funds.
In general, according to the classification of the SNA, social benefits (other than social transfers in kind) accounted for in the secondary income distribution phase include:
• all types of social benefits in cash, paid by the government sector from social security funds, as well as social assistance benefits paid by the government sector and the NGO sector serving households
• all types of social security benefits in cash and in kind , paid out of private funds and sources, related to the formation of special funds.
Social benefits in kind , provided to households by the sector of state institutions and NPOs serving households, are considered in the SNA as part of social transfers in kind and are not taken into account at the stage of secondary income distribution.
In-kind benefits received from special funds and from sources not related to their education, in accordance with their economic content in the SNA, do not refer to social transfers in kind and should therefore be taken into account at the stage of secondary income distribution.
The general scheme for classifying social benefits in accordance with the SNA is shown in Fig. 4.5.
Fig. 4.5. Scheme of classification of types of social benefits in accordance with the SNA
The last element in the system of current transfers reflected at the stage of secondary income distribution are other current transfers, carried out in monetary and in-kind forms between institutional units, which include, as elements in accordance with the SNA, : premiums and reimbursements for types of insurance not related to life insurance, current transfers between units of the public sector sector (redistribution of resources at the federal, regional, municipal levels, social security funds, etc.), international transfers (intergovernmental, related to participation in international organizations, etc.), as well as other current transfers (transfers to non-profit organizations serving households, transfers between household sector units, fines and penalties, compensation payments, etc.).
The result of secondary income distribution for the economic sectors is the formation of disposable income.
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