Transfer payment

From Wikipedia, the free encyclopedia

This article does not cite any references or sources. (June 2007)
Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed.

In political science and economics, a transfer payment is a payment of money from a government to an individual for which no good or service is required in return. In economics, government transfer payments can be considered a negative tax, since in the case of a tax, the government charges individuals without getting any good or service in direct exchange.

Examples of transfer payments include welfare, social security payments, publicly-funded pensions and public support for students, including scholarships and financial aid and death benefits for parents.

[edit] Alternative use for administrative transfer

In some federal systems the term is also used to refer to payments from one order of government to another; for example in Canada, transfer payments usually refer to a system of payments from the federal government to the provinces. Major Canadian transfer payments include equalization payments, the Canada Health Transfer and the Canada Social Transfer (formerly the Canada Health and Social Transfer) and Territorial Formula Financing.

They are sometimes referred to as income transfers