Use | Resources |
4.Current transfers transferred to the “rest of the world” 5.Gross national disposable income (clause 3 – item 4) | Primary income balance (gross) Current transfers received from the “rest of the world” |
6.Total (item 4 + item 5) | 3. Total (item 1 + item 2) |
The secondary income distribution account is important for individual sectors and very small for the economy as a whole. Secondary distribution is the redistribution of income already received between sectors. Households pay income taxes and social insurance contributions, voluntary contributions to public organizations, which are treated in the SNA as other transfers in cash, but receive various social payments.
Businesses pay income tax and can contribute to non-profit organizations. Thus, all sectors exchange a part of their income.
In sectoral accounts, such transactions are recorded twice in accordance with the principle of double entry. For example, the payment of income tax is reflected with a minus sign in terms of use in the account of the household sector, with a plus sign – in terms of resources in the account of the state sector. As a result of the reflection of all these operations, gross disposable income is obtained for each of the sectors, and for the economy as a whole – gross disposable national income, i.e. the maximum amount that each institutional unit, each sector, the economy as a whole can spend on final consumption and on accumulation, without reducing the value of its assets (for example, cash reserves, currency) and without increasing the amount of its debt.
Gross disposable income will be very different from the balance of primary income. But for consolidated accounts, for the economy as a whole, the amount of disposable income of all sectors will coincide (or almost coincide) with the amount of national income, because an increase in disposable income for one of the sectors could occur only if the disposable income of the other sector decreased by the same amount. Small deviations can only occur if there are transfers abroad or from abroad, for example, if the state pays pensions to non-resident households. However, these values can be extremely small in relation to the total amount of national income.