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The concept of income

The concept of income. 11 Items. Clarification of the income concept in the SNA GDP valued only at basic prices The role of taxes and subsidies on products in the SNA Life insurance and defined benefit pensions Reinvested earnings Accruing interest in the SNA (creditor v debtor)

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The concept of income

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  1. The concept of income

  2. 11 Items • Clarification of the income concept in the SNA • GDP valued only at basic prices • The role of taxes and subsidies on products in the SNA • Life insurance and defined benefit pensions • Reinvested earnings • Accruing interest in the SNA (creditor v debtor) • Calculation of FISIM • High inflation (1996 OECD manual) • The measurement of neutral and real holding gains and losses • Income arising from (financial) assets • Income from activities undertaken on an informal basis (exhaustiveness)

  3. Gentle slope into a big set of issues • How to sort these 11 items by priority? • Are some matters of narrow consistency of treatment (e.g., across types of insurance, including pensions) that might be dealt with immediately? • Is there a broader theme in the research agenda on which work might be planned after the main SNA implementation completes in 2015?

  4. Narrow consistency item • Life insurance and defined benefit pensions • Align defined benefit pensions with life insurance (and economic definition of income) or • Retain SNA’s exclusion of holding gains and losses from income and align life and other insurance with defined benefit pensions

  5. Two major themes • Treatment of holding gains and losses • 1,4,7,8,9,10 • Initial task: Elucidation of the implications for various parts of the accounts under the theme treating holding gains and losses according to the economic concept of income (change in wealth)—do 1,4,7,8,9,10 exhaust the possibilities? • Treatment of taxes and subsidies on products • 2,3 • Initial task: Elucidation …

  6. Questions: possible ways forward • Deal with the insurance consistency issue now as a clarification or a (minor?) change to the 2008 SNA? (Note for agenda item 2.7.1) • Revisit the issue with a paper or series of papers fleshing out the implications of the economic definition of income for the System at the next AEG meeting?

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