Definition: Taxes on transfer payments

Category: National accounts

In some countries transfer payments by the State are subject to taxation. That way part of what is paid by the State is immediately refunded to its budget (but not necessarily at the same level) in the form of taxes. In many cases (e.g. social aid) these taxes on transfers are not so much taxes but rather a special way of calculating a certain net transfer. Where the taxes on transfer payments could be identified they have been separated from other taxes and contributions.