Budget expenditures are directed either to current purposes (current expenditures) or to capital expenditures (capital expenditures). The economic characteristics of costs are reflected using the economic classification of costs and net crediting.
Schematically, the economic classification of expenses and net lending can be presented as follows.
General expenses and net lending (100,000 + 200,000 + 300,000)
Total expenses (100000 + 200000)
100000 Currentexpenses (110000 + 120000 + 130000)
110000 Expenses on goods and services
110100 Remuneration
110200 Payroll accruals
110300 Purchase of goods and services
110400 Payment for other services
120000 Interest payment
120100 Payment of interest on loans from Central Bank
120200 Payment of interest on loans from other levels of management
120300 Payment of interest on other domestic loans
120400 Payment of interest on public external debt
130000
130100 Subsidies
130200 Current transfer payments
130210 Transfers to other levels government controlled
130220 Transfers to non-profit (non-profit) organizations
130230 Transfers to households
200000 Capital Expenditures
210000 Acquisition of fixed capital
220000 Purchase of goods to create government reserves
230000 Acquisition of land and intangible assets
240000 Capital transfers
300000 Net lending
310000 Domestic lending
320000 External lending
Current expenses - ensure the ongoing functioning of organs state power, rendering financial assistance other budgets and individual sectors of the economy in the form of subsidies, subsidies and subventions for current functioning. These include expenses: for goods and services, payment wages, contributions to social insurance funds, interest payments for the use of borrowed funds, subsidies, and other current transfer payments. Current expenses include reimbursable payments, 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 their recipient, compensation for losses associated with the destruction or damage of capital assets , or increase financial capital recipient of such payments.
Current expenditure is divided into the following categories: expenditure on goods and services, interest payments, subsidies and current transfer payments.
Expenditures on goods and services- these are all payments by government bodies related to the payment of wages, wage accruals - employer contributions to social insurance funds, pension and social security programs, the purchase of goods and services themselves, etc.
Salary includes remuneration of workers and employees in cash before deductions of withholding taxes and contributions made to the Social Security Fund and the Pension Fund. This is the basic salary, salary supplements, bonuses, annual additional payment, payment of transportation and food expenses, payment overtime, night shifts, work on weekends, etc., compensation payments to employees on business trips, etc. This category does not include remuneration in kind: the cost of food, clothing and accommodation, provided either free of charge or at reduced prices.
Payroll accruals include: fees budgetary institutions for state social insurance, contributions to the Pension Fund, Compulsory Medical Insurance Fund. These deductions are made according to firmly established interest rates.
Expenses for the purchase of goods and services refer to goods and services acquired on the market or through loans, excluding capital assets, goods and services intended for the production of fixed assets, strategic and emergency stocks, stocks of goods regulating the activities of the market, as well as land and intangible assets. This category includes procurement of supplies and Supplies(stationery, medicines and dressings, soft goods and equipment, food, etc.), transportation costs, communication costs, public utilities, expenses for geological exploration, renovation work And Maintenance, the cost of low-value equipment and equipment with a service life of less than a year. This includes expenses for goods and services provided to employees free of charge or at reduced prices.
Interest payments include payments for the use of borrowed funds. The amount of interest can accumulate continuously, but its amount is shown at the time of payment. In the case of discount securities, the interest is calculated as the difference between the issue price and the redemption price of the security, and its registration is made at the time of actual repayment of the debt.
Subsidies and other current transfer payments include all gratuitous, non-refundable government payments intended for current purposes.
Subsidies include:
Subsidies to non-financial public enterprises received by them 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 ongoing payments by government agencies to non-financial private enterprises that are additional income to the income of producers received from current production.
Current transfer payments are divided into payments to national authorities at other levels of government, non-profit organizations, population, other countries (foreign governing bodies and international organizations, etc.). Transfer payments to national authorities at other levels of government include payments intended for current activities for special-purpose and multi-purpose purposes. This category may also include revenues from taxes levied by authorities at one level, which are redistributed between other levels of government, transfer payments to private organizations performing social functions - hospitals, schools, scientific societies and so on.
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, benefits payments and financial assistance, payment of benefits from the Social Insurance Fund (temporary disability benefits, maternity benefits, childbirth benefits, child care benefits, etc.). This also includes payments of benefits for sanatorium treatment and recreation.
Transfer payments to other countries are gratuitous, non-refundable payments to governments of other countries, international organizations, supranational bodies, 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 have 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 using their own resources, 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 used mainly to solve problems of national importance, the implementation of which cannot be ensured 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 and etc.
Capital expenditures of budgets, as provided for by the Budget Code of the Russian Federation, are expenses for innovation and investment activities, including expenses for investments in accordance with the approved investment program, funds for investment purposes provided as budget loans, major renovation 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 intended for use in non-military production that are purchased on the market or created on our own government bodies. This item also includes expenses for capital construction and major repairs.
Creation of state stocks and reserves– these are the costs of purchasing goods to create strategic and emergency stocks, stocks of goods acquired by organizations regulating the activities of the market, as well as stocks of grain and other goods that are of particular importance to the country.
Acquisition of land and intangible assets covers the costs of acquiring land, forests, inland waters and mineral deposits, but not construction projects located on them.
Intangible assets - These are assets that do not represent a financial claim on others (mineral rights, fishing rights, long-term land lease agreements, etc.).
Capital transfers intended to finance the recipient's expenses for the acquisition of capital assets, compensation for losses associated with the destruction or damage of fixed capital, or increasing the financial capital of the recipient. They are gratuitous payments by government bodies that are unilateral in nature and do not lead to the emergence or settlement of financial claims. Such payments are considered capital transfers if the governing body providing the financing or the recipient of the transfer considers the transfer to be capital in nature. It also includes transfer payments to enterprises intended to cover losses accumulated over a number of years or resulting from extraordinary circumstances.
Capital transfers are divided into transfers within the country and abroad.
Capital transfers within the country are gratuitous, non-refundable payments by government bodies for capital purposes to other levels of government, state-owned non-financial enterprises, financial institutions and other transfers within the 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.
The “net lending” category (lending minus repayments) includes the provision of loans and the acquisition of shares minus the amounts of loans repaid, proceeds from the sale of shares or returns equity.
Net lending (lending minus repayment). In the volume of net lending carried out for the purpose of carrying out public policy, includes the provision of loans less their repayment and the acquisition of shares less their sales for the same purposes. Thus, net lending is payments by government bodies that result in financial claims to other business entities or the acquisition of equity participation in enterprises, minus receipts that result in a reduction in the size or repayment of such claims or equity participation .
These operations are carried out for the purpose of carrying out government policy, for example, for lending to investment and other projects in need of state support, agriculture, housing construction, restoration of objects destroyed as a result natural Disasters and wars.
Net lending is divided into internal and external. 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.
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What does "transfer payments" mean?
Economic dictionary of terms
transfer payments
cash payments from the state budget to the population and private entrepreneurs, not related to their implementation civil service, but carried out in the order of redistribution of funds in favor of citizens who need them more through the budget; one of the schemes for the redistribution of state budgetary funds. It has three common forms: subsidies to private entrepreneurs, interest payments on public debt, government cash payments for social needs (pensions, benefits, etc.).
Large legal dictionary
transfer payments
transfer payments, one of the forms of redistribution of budget funds. They are divided into interest payments on public debt, payments for social needs (pensions, benefits and other types of financial assistance to the disabled, unemployed, etc.), subsidies to private entrepreneurs (active financing of fundamental developments, introduction into production of new competitive equipment, technology, new control systems, etc.).
A clear indicator social policy states become transfer payments. These payments are specific in nature and differ from the usual income associated with the performance of work and provision of services. Certain government obligations are intended for entrepreneurs and individuals who truly need support.
History of the appearance and essence of transfer payments
The basis of the state budget is made up of revenue and expenditure parts. The financial crisis and unfavorable economic conditions upset 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 the most appropriate way to provide support to affected populations.
As a result, these payments are targeted. Reforming the tax system leads to an increase in transfer payments used for their intended purpose.
Payments include support for entrepreneurs in small businesses and innovative technologies. They are intended for households and low-income individuals receiving scholarships and benefits of various types.
The social orientation of the transfer is beyond doubt. They began to take shape in the thirties. However, development occurred at the end of the Second World War. At this point, transfer payments include amounts in the form of interest allocated to repay the public debt and social insurance costs.
Support for particularly vulnerable groups and industrial production, including important strategic objects. 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 fallen to 12 percent from 30 percent over the past thirty years. The reason was an inefficient distribution system.
Types of payments
An increase in production and income 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 people and large families. They are taken into account as part of contributions to pensioners, disabled people and veterans.
- The second group includes private transfer payments. Gifts and money are passed on voluntarily from one civilian to another. The category covers subsidies for 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 purchased securities. The interest on the government debt is being repaid.
The transfer affects the main and local budgets of the regions. People with income become participants in the process, providing one-time or regular assistance to organizations and people in need.
The relationship between policy and payments
The transfer payment is a compromise option to restore balance and equitably distribute income. It is important to prevent a sharp stratification of the population, and to provide the opportunity to live at a decent level, not below the subsistence level.
Criticism of this form of transfer of funds does not prevent the active use of payments and maintaining their share at high level. Transfers are becoming an effective instrument of fiscal policy of any state.
There is a transfer of resources from government agencies and members of society without cost or creation of value. Payments include excise and customs duties, tariffs and taxes, credit transactions and interest on debts.
State policy has a dual purpose. The population is required 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 to pay is simply not possible. The allocated amounts are clearly not enough yet; the government’s immediate plans are to increase the transfer percentage to smooth out the situation.
Impact of government regulation
Reforming the economy and financial market does not stop for a minute. New operating mechanisms are being created and emerging issues have to be resolved without delay.
Interbudgetary relations affect central and local authorities. It is necessary to differentiate between rights and responsibilities, distribute income along with expenses by level, taking into account transfer payments.
Regions with wealth and those in need of financing lead to an equalization of budgetary security. A number of expenses are moving to the federal level. Some species are transmitted to local entities.
For 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 standards for deductions and payments from collected taxes and fees.
The task of the state is to control and effective management. A unified methodology is being created that takes into account geographical position And climatic conditions, economic condition and social situation. The transfer payment becomes an effective leveling tool that prevents it from reaching a critical point.
Transfer for the population
The transmission form is indeed favorably perceived by the population. Types of transfer include:
- Contributions to pensioners and the unemployed because they cannot find a job. Young people will be able to study, receive scholarships and financial support from relatives and foundations. People with disabilities need treatment and help.
- The goal of improving the demographic situation led to compensation payments to large families. There are numerous benefits from state and local authorities.
- Veterans of war and labor deservedly enjoy privileges. They are related to payment for services, treatment, free housing and subsidies.
- Registering a business will allow you to participate in the state program and receive 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 philanthropists. Schools and orphanages, clinics and scientific institutes, theaters and foundations are sponsored by rich people from their personal funds, without hope of making a profit.
This is partly facilitated by the ongoing tax policy. Certain benefits are provided for benefactors, given the explicit form of transfer payments.
Payment source
The revenue side of the budget is formed from many components. The increase in transfer payments is aimed at increasing tax payments. They become the main source of replenishment along with excise and customs duties. The monetary form is adjacent to the natural form, affecting products or equipment.
Reasons for absence from GDP
The absence of transfer payments in GDP is quite understandable. There is no return associated with profits from production and services. The transfer partly affects private and investment spending.
There is a constant flow of funds in two directions, which does not always reflect reality. Real wages are open and known, shadow wages are hidden from taxation.
Transfer payments are payments in the form of compensation to the population, legal entities, as well as other non-state owned enterprises. They are carried out to support these business entities during unfavorable economic factors in the state. It is based on the redistribution of resources from the budget in favor of people in dire need.
Definition
Transfer payments represent subsidies to enterprises of various Russian commodity producers and interest payments on government loans. This list can also include cash payments for social needs: scholarships, pensions, compensation for utility expenses.
Consideration of transfer payments is associated with determining the added value of any business entity. Its value is determined by the difference in the cost of creation and subsequent sale finished products and costs associated with the purchase of raw materials and supplies. The so-called one reflects the real contribution of each individual enterprise in creating the final product in the form of profit, wages and depreciation.
Procedure for accounting 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-productive transactions, consisting of two types: resale of goods and purely financial transactions, are subtracted from the resulting value.
Types of transfer payments
In this case, the second type of non-production operations is divided 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 assistance to students from their parents, gifts from wealthy relatives, etc. These transactions are not a consequence of production activities, and act as a transfer Money 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 one economic entity to another on a free basis. This is why various transactions in the securities industry (for example, the purchase and sale of bonds and shares) are also withdrawn when calculating GDP, because these transactions are a simple exchange of paper assets for the purpose of redistributing property.
History of origin
As recently as 1944, such payments consisted primarily of interest on the federal debt 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 and presented as transfer payments were also excluded. This in 1944 favored the covering of transfer payments by social security taxes. However, in the subsequent post-war years, these articles no longer balanced each other. Therefore, the basic rule applicable to any year of our era is the need to subtract the amount excluded from transfer payments from government cash receipts. Only with this algorithm, the amount of taxes plus gross savings will become equal to the amount of government spending combined with gross investment.
Transfer payments to the population
This type of payment falls into the “unearned” category. In other words, it is not a direct payment for services provided and can also be classified as such 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 may be included here. And finally, thirdly, transfer payments include interest payments on state 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 insurance contributions are withheld from income before wages are paid. This is necessary to create a certain balance in the state’s economy and to create the basis for subsequent transfer payments.
The 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, there are also significant changes associated with the goals set, the methods used and the mechanisms 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
To function effectively, the state must always have a certain part national income in the current market economy. Therefore, the primary task of government intervention is direct regulation on its part, which is expressed in the implementation of measures aimed at reducing Modern market contributes to the emergence of such inequality in distribution between citizens. Today, amidst global 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 monetary form. They are often presented in the form of targeted means of payment or in kind (an example is the issuance of baby food). From the perspective of macroeconomics, the amount of transfer payments should be calculated quantitatively, since the required amount of tax revenue depends on the amount received. After all, taxes are the main source for transfer payments.
Reasons for non-inclusion in GDP
The non-inclusion of their amount in GDP is due to the lack of production of a new product as a result of such payment; only redistribution occurs. Transfer payments are subject to inclusion only in consumer private expenditures and in the investment costs of companies (in the form of subsidies).
In this case, the receipt of private funds is subject to partial compensation by the reverse flow of payments, taking the form of transfer payments.
TRANSFER PAYMENTS
TRANSFER PAYMENTS
(transfer payments) Payments of income that are not related to payment for current services of a production factor. In many countries, the government makes large-scale transfer payments, especially to pensioners, the disabled and the unemployed. States also make transfer payments abroad. A large number of transfer payments are made by private charities. Transfer payments are not part of the national product; as their name implies, they merely transfer the ability to spend funds from one group of people to another.
Economy. Dictionary. - M.: "INFRA-M", Publishing House "Ves Mir". J. Black. General editor: Doctor of Economics Osadchaya I.M.. 2000 .
TRANSFER PAYMENTS
cash payments from the state budget to the population and private entrepreneurs, not related to their performance of public service, but carried out in the order of redistribution of funds in favor of citizens who need them more through the budget; one of the schemes for the redistribution of state budgetary funds. It has three common forms: subsidies to private entrepreneurs, interest payments on public debt, government cash payments for social needs (pensions, benefits, etc.).
Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B.. Modern economic dictionary. - 2nd ed., rev. M.: INFRA-M. 479 pp.. 1999 .
Economic dictionary. 2000 .
See what "TRANSFER PAYMENTS" are in other dictionaries:
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