A fair and equitable sharing of the
economic development of the country can be seen from the distribution of income
in the country. Distribution of income received by the people in a country are
intended to improve the level of people who are still living in poverty. The
distribution of income is also income distribution as a whole, in the narrow
sense of the different levels of income between households or decrease social
inequalities.
Income distribution according to
economic experts can distinguish among others:
1. The
distribution of personal income.
Individual
income distribution indicates the distribution of income received by
individuals in the community. The focus in this distribution model that is how
much revenue received by a person, do not see
techniques or ways by individuals and households to obtain its income, number
of household members who are looking for income to meet household needs or
whether the income derived from employment or other sources such as flowers,
gifts, royalties, gains or inheritance. The location and sector revenue sources
were also ignored.
2. Functional
income distribution.
Functional
income distribution describes the proportion of income received by each factor
of production. Each of the factors of production receive rewards in accordance
with the distribution of national production. Income distribution is based on
the owners of production factors related to the revenue growth. Revenue growth
in a society that is based on the ownership of production factors can be
grouped into two kinds:
a) Revenues for
the work in the form of wages or salary and the amount depends on the level of
productivity.
b) Income from
other sources such as rents, profits, royalties, interest, gift, or
inheritance.
Government programs in the framework of the distribution of income are generally divided in:
1. Transfer Cash.
This is a form of cash transfer equalization method with instruments of money or income received. Various cash transfers, among others:
a) Negative Income Tax.
Negative income tax is a government policy that resulted in a large transfer payments received by the public by the poverty level of the community. In other words, the poorer the community, the greater the transfer payments received. The program is not implemented in Indonesia.
The impact of this program includes:
§ increase the laziness of society to work because getting adequate income even without working.
§ The emergence of the notion of injustice for the people who have relatively high income that the program is considered not appreciate the hard work.
§ Reducing work incentives
§ Reducing the level of wages or creation of welfare cost.
§ The occurrence of tax incidence.
b) Demo-grant
Demo-grant is a form of cash
transfers based on specific demographics. Examples of these programs one of
which is the direct cash assistance. This program is the most widely
practiced in Indonesia. Effects of the
implementation of this program are as follows:
• Reduce work
incentives
• The welfare
costs of reducing the level of wages
• The
occurrence of tax incidence.
c. Wage
subsidies
Wage subsidy
that is by increasing net wages received by workers. Such programs can be seen
from the benefits received by workers in all sectors especially civil servants.
The impact of this program includes:
• Improve work
incentives
• Reducing the
cost of welfare.
2. Transfer of
goods.
The transfer of
goods or transfer programs is a transfer program with the form of physical
goods are transferred is not money. The downside of this program is the
transfer recipient is not free in spending transfer. While the advantage of
increasing the consumption of the goods are transferred, causing the external
benefits the manufacturer of the goods are transferred. It also adds to the
amount of tax paid to the state on the external benefits.
3. Program of
employment opportunities.
The program is
a form of employment opportunity program income distribution through
employment. One example of this program is the National Program for Community
Empowerment (NPCE). This program is the best program among other programs
because of the presence of employment will increase real investment that will
reduce unemployment and increase GDP. But on the other side of this program
will reduce work incentives and causing huge welfare costs so that the level of
wages will be reduced and the supply of labor in the private sector will be
reduced. In addition to the tax rate for manufacturers will be increased.
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