What concerns transfer payments. See pages where the term transfer payments is mentioned. Private transfer payments
Transfer payments are becoming a clear indicator of the state's social policy. These payments are specific in nature and differ from the usual income associated with the performance of work and the provision of services. Certain government obligations are for entrepreneurs and individuals who really need support.
The history and nature of transfer payments
The state budget is based on the revenue and expenditure side. The financial crisis and unfavorable economic conditions are upsetting the balance, and measures must be taken to restore it.
It is most convenient to use the transfer form of redistribution. Transfer payments are considered to be the most acceptable way to provide support to affected populations.
As a result, these payments are targeted. The reform of the taxation system leads to an increase in transfer payments used for their intended purpose.
Payments include support for small business entrepreneurs and innovative technologies. They are targeted at households and low-income individuals who receive scholarships and benefits of a variety of types.
The social orientation of the transfer is beyond doubt. They began to form in the thirties. However, the development took place at the end of the Second World War. At this point, transfer payments include the amount in the form of interest allocated to repay public debt and social security costs.
Support for especially vulnerable groups and industrial production, including important strategic facilities, began. It flourished in the fifties, as payments reached 30 percent of the budget.
Now we can talk about a figure of 15 percent. The Swedish government is raising the bar to 32 percent. In the United States, they have dropped to 12 percent from 30 in the past thirty years. The reason was an ineffective distribution system.
Payment types
The growth of production and revenue side inevitably leads to a decrease in transfer costs. The opposite picture indicates their increase. Essentially, these government payments fall into three categories.
- The first type includes benefits for the unemployed, low-income families and large families. They are included in contributions to pensioners, disabled people and veterans.
- The second group includes private transfer payments. Gifts and money are transferred on a voluntary basis from one civilian to another. The category affects subsidies to start-up businessmen and industries with development prospects - agriculture, innovative technologies, defense and medicine.
- A typical example of transfer payments of the third type are contributions to pension funds and financial structures that have purchased securities. The interest on the public debt is being paid off.
The transfer affects the main and local budgets of the regions. People with wealth become participants in the process, providing one-time or regular assistance to organizations and a person in need.
Relationship between policy and payments
Transfer payment is a compromise option for rebalancing and fair distribution of income. It is important not to allow a sharp stratification of the population, and to provide an opportunity to live at a decent level, not lower than the subsistence level.
Criticism of this form of transfer of funds does not prevent the active use of payments and maintain their share at a high level. Transfers are becoming an effective instrument of fiscal policy of any state.
There is a movement of resources from government agencies and members of society without cost and value creation. Payments are included in excise and customs duties, tariffs and taxes, credit transactions and payment of interest on arrears.
State policy pursues a twofold goal. The population is obligated to pay taxes to the treasury. At the same time, there is a reverse movement of payments to a significant percentage of the population.
Crisis phenomena affect all countries. Refusal of payments is simply unavailable. The allocated amounts are still clearly not enough, in the nearest plans of the government to raise the percentage of the transfer to smooth the situation.
Impact of government regulation
Reforming the economy and financial market does not stop for a minute. New mechanisms of functioning are being created and it is necessary to resolve the issues that have arisen without delay.
Inter-budgetary relations affect central and local authorities. We have to distinguish between rights and obligations, to distribute income together with expenses by levels, taking into account transfer payments.
Regions with prosperity and those in need of funding lead to an equalization of budgetary provision. A number of expenses are transferred to the federal level. Some species are transferred to local entities.
During the financial year, it is difficult to amend items related to increases or decreases in income and expenses. The principle of equality should provide for uniform rates of deductions and payments from collected taxes and fees.
The task of the state is control and effective management. A unified methodology is being created that takes into account the geographical location and climatic conditions, economic condition and social situation. The transfer payment is becoming an effective leveling tool that does not allow reaching a critical point.
Transfer for the population
The transfer form is really well received by the population. Types of transfers include:
- Contributions to pensioners and the unemployed, since they cannot find a job. Young people will be able to study, receive scholarships and material support from relatives and foundations. People with disabilities need treatment and assistance.
- The task of improving the demographic situation has led to compensation payments to large families. There are numerous benefits from state and local authorities.
- War and labor veterans deservedly enjoy privileges. They are related to payment for services, treatment, free housing and subsidies.
- Business registration will allow you to participate in the state program and issue a subsidy for development. Attention is paid to promising industries and technologies. Competitions are held, materials are purchased and employees are trained.
Private payments attract many patrons of the arts. Schools and orphanages, clinics and scientific institutes, theaters and foundations are sponsored by wealthy people from personal funds, with no hope of making a profit.
This is partly due to the current tax policy. There are certain benefits for benefactors, given the explicit form of transfer payments.
Source of payments
The revenue side of the budget is formed from many components. The increase in transfer payments is focused on the growth of tax deductions. They become the main source of replenishment together with excise and customs duties. The monetary form is adjacent to the natural form, affecting products or equipment.
Reasons for the absence in GDP
The absence of transfer payments in GDP is understandable. There is no return associated with profits from the production of goods and the service sector. In part, the transfer affects private and investment costs.
There is a constant flow of funds in two directions, which does not always reflect reality. The real salary is open and known, the shadow one is hidden from taxation.
All additions to earned income are associated, like deductions, with the regulatory activities of the state, which not only removes part of the earned income through taxes, but also returns it to certain segments of society. In economic theory, incomes "returned" by the state withdrawn through taxes are called "Transfer payments"("Transfer" in translation from English means "transfer"). These include: pensions, child benefits, disability benefits, unemployment benefits, government subsidies to war veterans and labor, etc.
12. How is national income calculated?
National income(ND) is the total income earned by owners of factors of production: labor owners (wages of employees), capital owners (profit and interest), land owners (land rent).
To determine the ND from the CHIP, it is necessary to deduct indirect taxes. The latter are markups to the price of goods and services (excise taxes, VAT, customs duties, etc.). Therefore, ND = CHIP - indirect taxes.
Topic: inflation in modern economy
Inflation as a result of excessive emission of money. Types of inflation: open and suppressed. Demand inflation and cost inflation. Inflation indicators. Consumer price index and inflation rate. Socio-economic consequences of inflation. Influence of inflation on economic growth. Changes in the population's income in the context of inflation. Anti-inflationary strategy and tactics.
LESSON PLAN
1. Inflation: essence and types.
2. Socio-economic consequences of inflation.
3. Strategic and tactical anti-inflationary measures of the state.
4. Features of inflationary processes in Russia.
BASIC CONCEPTS
Inflation. Open inflation. Suppressed inflation. Creeping inflation. Galloping inflation. Hyperinflation. Expected inflation. Balanced and unbalanced inflation. Demand inflation. Cost inflation. Consumer price index. Inflation rate. Adaptive inflation expectations. Consumer basket. Deflator of GDP. Phillips curve.
Review questions
What is the essence of inflation?
Inflation is a paper money disease when money has lost its connection with gold. In such conditions, the volume of paper money in circulation acquires exceptional value - if it exceeds the needs of commodity circulation, then there is inflation(lat - "bloating") as a result of excessive emission of money. Indeed, inflation is a kind of paper money "flux" of the market economy
Inflation is damaging to the market economy. Since it is expressed in general raising the level of all prices, this has a number of negative consequences.
First of all, money is depreciated. The established proportions between the prices of goods are violated. It is becoming more and more difficult for the seller and the buyer to make the best economic decision. It is even more difficult to give an economic forecast and long-term calculations Risk arises with large investments Protection against such risk is seen in an increase in profit and interest, which leads to an even greater rise in prices Therefore, entrepreneurs are more focused on short-term solutions (mainly speculative). for those with fixed wages are not immune to inflationary price increases. Cash savings of the population also depreciate Loan becomes unprofitable
In a word, inflation, disrupting market processes, I"Explodes" both production and consumption, increasing social tension in society.
What are the causes of inflation?
The first reason consists in the fact that modern money circulation is carried out by "paper" signs that have cut off any connection with gold. In the era of "gold money" their surplus was overcome by the "departure" of gold from the sphere of circulation to the sphere of accumulation. And here is the paper money, which is only a means of circulation, hoarding like gold is pointless. But, unlike gold money, paper money simply has nowhere to go: the sphere of circulation is their only abode.
Moreover, a “closed inflationary run” arises: the rise in prices requires even more banknotes for circulation, and a new portion of them leads to a new rise in prices, again demanding an increase in the money supply, and so on.
Thus, the first reason for inflation is in the “paper” nature of modern monetary circulation, since the limit on the issue of paper money in the form of the amount of their gold backing determined by the law has been removed.
But maybe then you should again return to the "gold" money? Alas, this is now impossible: what used to be the dignity of gold as money (its own high value) has now turned into a disadvantage. The nature of paper money, freed from the golden "weight", turns them into an ideal operational indicator of the movement of commodity prices.
The second reason- this is a constant increase in the costs of a civilized state to finance national, economic and social programs (defense system, assistance to the unemployed, support for the poor, spending on science, education, ecology, etc.)
Both of the above causes of inflation are combined under the name "Demand inflation" since this is a need for additional money on the demand side, buyers.
Third reason inflation - demand for money from outside producers(that's why it got the name "cost inflation") The fact is that in the structure of expenses of post-industrial production the main place is occupied by "wages", and the more civilized the society, the higher its size. The rise in prices for goods begins to unwind the spiral "prices - wages" - the higher the prices, the higher the wages should be, and the higher the wages, the higher the production costs (and the prices of production goods). In this sense, they speak of "cost inflation".
It is necessary to take into account that the concepts of earned income differ, that is, received as a result of the worker's labor activity, and income received [McConnell, Bru, vol. 1, p. 143]. On the one hand, not all earned income goes to households. This applies, for example, to social security contributions, corporate income taxes. On the other hand, some of the income that goes into households is not the result of labor. First of all, these are transfer payments, which include payments for social security and accidents, unemployment and disability benefits and some other types of social assistance from the state.
Second, taxes and subsidies are referred to as transfer payments. They represent the transfer of rights to real resources from one member of society to another (or the public sector) without any change in national income. Transfer payments are a transaction in which no new value is created, although control over real resources is transferred from some. hands to others. In other words, such transactions create neither costs nor benefits.
Transfer payments of enterprises and population to the state include, for example, customs duties, excise duties, tariffs, taxes on land, on profits (income), etc.
Transfer payments of the state to the population and enterprises include various subsidies, grants and benefits (Table 3.2). They are trans
O include transfer payments that
Adjustment for direct transfer payments
The first step in adjusting financial prices to turn them into economic prices is to eliminate all transfer payments. In oil and gas projects, the most common transfer payments are taxes, duties and lending operations, which include issuing loans, receiving, repaying principal, interest payments and other financial expenses.
In some cases, the mechanical exclusion of transfer payments does not give the desired result, since the very basis for determining the financial price is distorted. For example, the official wages in the Russian Federation are currently little connected in many industries with the true cost of labor. Hidden underemployment, use of the main job for
Expenses include all non-refundable payments, regardless of whether they are reimbursable or gratuitous and for what purposes they are carried out - current or capital. Transfer payments to others are included in expenses and are not categorized in their own right.
Subsidies and other ongoing transfer payments
The following provisional data is available, RUB bln. expenses on goods and services - 50 payments of interest - 90 acquisition of fixed capital - 42 expenses on housing and communal services - 14 subsidies and other transfer payments - 85 expenses on mineral resources (excluding fuel) - 24.
If we take into account the activities of the state, then the original Keynesian model will change in two directions. First, the government purchases goods and services for a total of g. Secondly, the state receives funds by collecting taxes in the amount /, minus the amount of transfer payments.
P. b. consists of the following sections trade balance account, payments and receipts for services; transfer payments; capital account; reserve operations account. The trade balance account is designed to regulate the cost of purchasing imported goods in accordance with export earnings. Payments and receipts for services are
The term "transfer payments" is used to refer to payments that occur in the financial documents of a project, but do not affect national income. Direct transfer payments (including income taxes, property taxes, and subsidies) redistribute national income. From the point of view of the economic entity implementing the project, taxes and subsidies affect the benefits and costs of the project, and from the point of view of society, the tax on this entity is the state revenue, and the subsidy in favor of this
Tax - in the national economic analysis, taxes are considered as pass-through, transfer payments and are not taken into account.
Please note that customs duties are not included in economic calculations as they relate to transfer payments.
In our case, the significant difference in the indicators of the economic and financial effect is mainly due to two reasons, firstly, the 6-fold difference between the economic value and the financial price of natural gas, and secondly, the lower economic assessment of all types of costs in comparison with their financial price. The latter depends both on the share of transfer payments in the structure of the resource cost, and on the value of the standard conversion factor taken into account. Since this value was adopted by us rather conditionally, we will start the sensitivity analysis from it. Table A2-12 shows (line 1) that the use of SF = 1 is not too significant, but still reduces the economic efficiency indicators in comparison with the initial estimate (see the previous table. A2-11) -If the total system of customs duties and subsidies are such that the official exchange rate underestimates the value of goods domestically (i.e., the premium on currencies
Expenditure refers to government payments that are not refundable, i.e. that do not create or repay financial claims. From an economic point of view, expenses are divided into current and capital, as well as reimbursable and non-reimbursable. If expenses are reimbursable, then it is necessary to determine for the acquisition of what types of goods and services they are used, if gratuitous, then in respect of whom they are carried out by residents or non-residents, government bodies or non-state structures, enterprises and other units. Transfer payments to other governments are included in expenditures and are not categorized in their own right.
TRANSFER PAYMENTS IN NATURAL FORM - transfer payments in the form of free provision of goods or services (food, housing, medical care). TRANSFER SERVICES - type of contract. The issue of a large number of low-nominal shares, along with the benefits, poses a number of problems for issuers associated with the implementation of operational accounting of securities and their owners, notifying numerous shareholders about the results of the company's activities, distribution of dividends. Moreover, the greatest difficulties arise before issuers not during the placement, but during the re-registration of the owners of securities in the secondary market. At this stage, issuers are faced with a complete lack of both experience and specialists, as well as with large flows of documentation, sometimes even unreliable. Cases of failures during re-registration directly affect
Budget expenditures are directed either for current purposes (current expenditures) or for capital expenditures (capital expenditures). The economic characteristics of costs are reflected using economic classification of costs and net lending.
Schematically, the economic classification of expenses and net lending can be presented in the following form.
General expenses and net lending (100,000 + 200,000 + 300,000)
General expenses (100,000 + 200,000)
100000 Currentexpenses (110000 + 120000 + 130000)
110,000 Expenditures on goods and services
110100 Labor compensation
110200 Payroll
110300 Purchase of goods and services
110400 Payment for other services
120000 Interest payment
120100 Payment of interest on loans from the Central Bank
120200 Payment of interest on loans from other levels of management
120300 Payment of interest on other loans within the country
120400 Payment of interest on public external debt
130000
130100 Subsidies
130200 Current transfer payments
130210 Transfers to other levels of government
130220 Transfers to non-profit (non-profit) organizations
130230 Transfers to households
200000 Capital expenditures
210,000 Acquisition of fixed capital
220,000 Purchase of goods to build up government stocks
230,000 Acquisition of land and intangible assets
240,000 Capital transfers
300000 Net lending
310,000 Domestic lending
320,000 External lending
Current expenses - ensure the current functioning of public authorities, the provision of financial assistance to other budgets and certain sectors of the economy in the form of grants, subsidies and subventions for the current functioning. These include expenses: for goods and services, payment of wages, contributions to social insurance funds, interest payments for the use of borrowed funds, subsidies, and other current transfer payments. Current expenditures include fees paid, with the exception of payments for capital assets or goods and services that are intended to create capital assets, as well as any gratuitous payments, the purpose of which is not the acquisition of capital assets by the recipient, compensation for losses associated with the destruction or damage to capital assets , or an increase in the financial capital of the recipient of such payments.
Operating expenses fall into the following categories: expenses for goods and services, interest payments, subsidies and current transfer payments.
Expenses for goods and services- these are all payments of government bodies related to the payment of wages, payroll - contributions of employers to social insurance funds, pension and social security programs, the purchase of goods and services, etc.
Salary includes wages and salaries of workers and employees in cash before deducting withholding taxes and contributions made to the Social Insurance Fund and the Pension Fund. These are basic wages, wage supplements, bonuses, annual additional payments, payment of transport and food expenses, payment of overtime work, night shifts, work on weekends, etc., compensation payments to employees on business trips, etc. This category does not include wages in kind: the cost of food, clothing and accommodation provided either free of charge or at reduced prices.
Payroll include: contributions of budgetary institutions to state social insurance, contributions to the Pension Fund, the Mandatory Medical Insurance Fund. These payments are made at fixed interest rates.
Expenses for the purchase of goods and services refer to goods and services purchased on the market or through loans, excluding capital assets, goods and services intended for the production of fixed assets, strategic and emergency reserves, stocks of goods regulating market activities, and land and intangible assets. This category includes purchases of supplies and consumables (office supplies, medicines and dressings, soft inventory and equipment, food, etc.), transportation costs, communications costs, utilities, exploration costs, repairs and maintenance. , the cost of low-value equipment and equipment with a service life of less than a year. This includes the cost of goods and services provided to workers free of charge or at reduced prices.
Interest payments include payments for the use of borrowed funds. The amount of interest can be accumulated continuously, but its value is shown at the time of payment. In the case of discounted securities, interest is calculated as the difference between the issue price and the redemption price of the security, and is recorded at the time the debt is actually repaid.
Subsidies and other ongoing transfer payments includes all gratuitous, non-refundable government payments intended for current purposes.
Subsidies include:
Subsidies to nonfinancial public enterprises received on the same terms as for private enterprises; subsidies to financial institutions - gratuitous, non-refundable current payments, including transfer payments to cover losses associated with the purchase and sale of foreign currency;
Actual losses of departmental enterprises arising in cases where the proceeds from the sale of goods and services do not cover the production costs incurred by them;
Subsidies to other enterprises are current payments by the government to nonfinancial private enterprises, which are additional revenue to producers' income from current production.
Current transfer payments are subdivided into payments to national bodies of other levels of government, non-profit organizations, the population, other countries (foreign government bodies and international organizations, etc.). Transfer payments to national authorities at other levels of government include payments intended for current targeted and multipurpose activities. This category may also include income from taxes levied by bodies of the same level, which are redistributed among other levels of government, transfer payments to private organizations performing social functions - hospitals, schools, scientific societies, etc.
Transfer payments to households- These are current payments to the population in cash, serving to increase their disposable income. When determining the expenses of government bodies as a whole, the expenses of extra-budgetary funds are also reflected here: pensions paid from the Pension Fund, payments of benefits and material assistance, payment of benefits from the Social Insurance Fund (benefits for temporary disability, for pregnancy and childbirth, for the birth of a child, for childcare, etc.). This also includes payments of benefits for spa treatment and recreation.
Transfer payments to other countries are gratuitous, non-refundable payments to the governing bodies of other countries, international organizations, supranational authorities, individuals, non-profit institutions and other non-resident economic units intended for current purposes.
Under capital expenditures means payments for the purpose of paying for acquired capital assets, land, intangible assets, strategic and emergency stocks of goods, or gratuitous payments (capital transfers) transferred to their recipients for the purpose of acquiring similar assets, compensation for losses incurred in connection with the destruction or damage of fixed assets, or to increase the financial capital of the recipient of such transfers.
Economic reforms in Russia led to the transformation of a significant part of state-owned enterprises into joint-stock companies and the emergence of other forms of non-state enterprises. Non-state enterprises must develop production at their own expense, using primarily their savings, loans and raising capital by issuing securities. This is associated with a reduction in centralized budgetary allocations to finance capital expenditures. State funds are mainly used to solve problems of national importance, the implementation of which is not possible to ensure at the expense of non-state sectors of the economy. However, even in market conditions, government resources remain important for financing investments in the public sector, implementing government programs, and supporting individual industries and territories. Significant funds are spent on the construction of housing for military personnel, social development, etc.
Capital expenditures of budgets, as provided by the Budget Code of the Russian Federation, are expenditures on innovation and investment activities, including expenditures for investments in accordance with the approved investment program, funds for investment purposes provided as budget loans, capital repairs and other similar costs in accordance with economic classification.
State financing of capital investments in a market economy is directed to purposes that cannot be financed from other sources.
Acquisition of fixed capital includes expenditures on new or existing durable goods for use in non-military production that are purchased from the market or created internally by governments. This item also includes expenses for capital construction and major repairs.
Creation of state reserves and reserves- This is the cost of purchasing goods for the creation of strategic and emergency stocks, stocks of goods purchased by organizations that regulate market activities, as well as stocks of grain and other goods of particular importance to the country.
Acquisition of land and intangible assets covers the cost of acquiring land, forests, inland waters and mineral deposits, but not construction sites located on them.
Intangible assets - these are assets that do not represent financial claims on others (mining rights, fishing, long-term land leases, etc.).
Capital transfers are intended to finance the expenses of the recipient for the acquisition of capital assets, compensation for losses associated with the destruction or damage to fixed capital, or an increase in the financial capital of the recipient. They are gratuitous payments by governments that are unilateral and do not give rise to or settle financial claims. Such payments are considered capital transfers if the financing authority or the recipient of the transfer considers the transfer to be capital in nature. It also includes transfer payments to businesses designed to cover losses accumulated over a number of years or arising from extraordinary circumstances.
Capital transfers are divided into transfers within the country and abroad.
Domestic capital transfers are gratuitous, non-refundable payments by governments for capital purposes to other levels of government, public non-financial enterprises, financial institutions, and other transfers within a country.
External transfers abroad are gratuitous, non-refundable payments by government bodies intended for capital purposes, transferred to foreign governments and international organizations, supranational bodies, individuals, non-profit institutions and other economic units that are not residents of the national economy.
Net lending (lending less repayments) includes loans and acquisitions of shares less repaid loans, proceeds from the sale of shares, or return on equity.
Net lending (lending minus repayment). Net lending for public policy purposes includes loans less repayment and purchases of shares less sales for the same purpose. Thus, net lending is payments by government bodies that result in financial claims on other business entities or equity participation in enterprises is acquired, minus proceeds that result in a reduction or settlement of such claims or equity participation. ...
These operations are carried out in order to carry out state policy, for example, for lending to investment and other projects in need of state support, agriculture, housing construction, restoration of facilities destroyed as a result of natural disasters and war.
Net lending is subdivided into domestic and foreign. Domestic lending is lending to national authorities at other levels of government, non-financial state and non-state enterprises, financial institutions and other domestic net lending. External lending is lending to foreign authorities, international organizations, foreign firms and other external net lending.
Transfer payments are payments in the form of compensation to the population, legal entities, and other non-state enterprises. They are carried out to support these business entities with unfavorable economic factors in the state. It is based on the reallocation of resources from the budget in favor of people in dire need.
Definition
Transfer payments represent subsidies to enterprises of various Russian producers and interest payments on government loans. This list can also include cash payments for social needs: scholarships, pensions, compensation for utility bills.
Consideration of transfer payments is associated with the determination of the added value of any business entity. Its value is determined by the difference in the value created with the subsequent sale of finished products and the costs associated with the purchase of raw materials and materials. The so-called displays the real contribution of each individual enterprise in the creation of the final product in the form of profit, wages and depreciation.
Accounting procedure for transfer payments
Transfer payments are reflected in the calculation of GDP. In this case, the cost of goods and services that are produced (provided) in the current period should be taken into account. However, certain non-production operations are deducted from the resulting value, consisting of two types: resale of goods and purely financial transactions.
Types of transfer payments
In this case, the second type of non-production operations is subdivided into the following types:
- Government transfer payments, represented by pensions, scholarships, unemployment assistance, gifts and assistance to various low-income categories.
- Private transfer payments, which are formed, for example, from help to students from their parents, gifts from wealthy relatives, etc. These operations are not a consequence of production activities, and act as a transfer of funds from one private person to another.
Therefore, there is another, broader definition. Transfer payments are an irrevocable and unilateral transfer of property rights, funds, goods and services by some economic entities to others on a free basis. That is why various transactions in the field of securities (for example, the purchase and sale of bonds and stocks) are also withdrawn when calculating GDP, because these transactions are a simple exchange of paper assets in order to redistribute property.
History of origin
Back in 1944, such payments consisted mainly of federal debt interest and social security benefits. Transfer payments were not payments for purchased goods or services. Therefore, they were also excluded from GDP. In accordance with the above, those received from the state, presented as transfer payments, were also excluded. This in 1944 favored the coverage of transfer payments with social security taxes. However, in the subsequent post-war years, these articles have already ceased to balance each other. Therefore, the basic rule applicable to any year of our era is the need to deduct the amount excluded for transfer payments from cash receipts of national importance. Only with such an algorithm will the amount of taxes with the addition of gross savings become equal to the amount of government spending in aggregate with gross investment.
Transfer payments to the public
This type of payments belongs to the category of "unearned". In other words, it is not a direct payment for the services provided and can also be classified under such an economic category as transfer payments. This is, firstly, a social insurance benefit, which is paid to unemployed or elderly citizens. Secondly, benefits to war veterans can be included here. And finally, thirdly, transfer payments include payments of interest on government debts. Thus, any citizen of Russia may include payments for the production and sale of goods and services, as well as transfer payments. However, at the same time, social security contributions are withheld from income before wages are paid. This is necessary to create a certain balance in the economy of the state and to create the basis for subsequent transfer payments.
Impact of government regulation on transfer payments
The main priority in state economic regulation is the reformation and reorientation of the state economic sector currently at the disposal of the country. In this sector of the economy, significant changes are also taking place associated with the goals set, the methods and mechanisms used for the functioning of public sector facilities. During such a period, new problems may arise related to the coordination of the actions of the state property sector and the private economic sector.
Source of transfer payments
For effective functioning, the state must always have a certain part of the national income in the current market economy. Therefore, the primary task of state intervention is direct regulation on its part, which is expressed in the implementation of measures aimed at reducing the modern market contributes to the emergence of such inequality in the distribution between citizens. Today, in the midst of universal abundance, poverty continues to be a pressing political and economic problem. Therefore, an increase in transfer payments contributes to the redistribution of tax revenues, thanks to payments from the state to certain segments of the population in the form of certain benefits (for example, unemployment or war veterans), as well as social insurance payments. Thus, these subsidies form some resource flows that do not always take the form of money. They are often presented in the form of earmarked means of payment or in kind (for example, the distribution of baby food). From the standpoint of macroeconomics, the amount of transfer payments should be quantified, since the required amount of tax revenues depends on the amount received. After all, taxes are the main source for transfer payments.
Reasons for not being included in GDP
The non-inclusion of their sum in GDP is due to the absence of a new product as a result of such a payment; only redistribution occurs. Transfer payments should be included only in consumer private spending and in the investment costs of companies (in the form of subsidies).
In this case, the receipt of private funds is subject to partial reimbursement by the reverse flow of payments that take the form of transfer payments.
