According to the estimates, the total volume of import duties paid by households amounted to BYR 5.0 trillion in 2015. The Ministry of Finance reported BYR 8.6 trillion revenue from import duties. These numbers look reasonable as import of investment goods is largely exempted from import duties, while intermediate goods are mainly imported within the customs union with Russia and other CIS countries. According to our estimates import duties are progressive in absolute terms, but neutral in relative terms (see Figure 9). The payment of import duties accounts for similar shares of disposable income in lower and upper deciles. The only exception is the 10<sup>th</sup> decile, in which people tend to save more and spend more on real estate and services.

# **3.4. Direct transfers**

Data on the majority of direct transfers received by households is available in HBS files. They feature revenues from the following benefits and privileges:

- Benefits `o` pregnancy registration and child birth benefit `o` maternity benefit `o` children allowances for children aged below 3, `o` children allowances for children aged above 3, `o` attendance allowance `o` funeral benefit `o` pension for death of a breadwinner `o` pension for disabled children `o` unemployment benefit `o` severance pay `o` student grants `o` social assistance and other

- Privileges `o` Food privilege `o` Passenger transportation privilege `o` Hosing and utilities privileges `o` Fuel privileges `o` Electricity privileges `o` Communication service privileges `o` Health resort privileges `o` Privileges for pharmaceuticals `o` Privileges for social rehabilitation appliances `o` Preschool education privileges `o` Other privileges

The total amount of benefits received by households corresponds to public expenditures of BYR 17.6 trillion. It matches the official figure of BYR 17.5 trillion that SPF spent on financing social benefits in 2015. The volume of privileges, according to HBS data, equaled to public expenditures of BYR 3.2 trillion. The distribution of cash and in-kind direct transfers differs significantly. Benefits are progressive in absolute and relative terms (see Figure 10a). The first decile ranked by disposable income net of transfer receives on average almost 2 times more benefits in absolute terms than the second decile. Benefits increase the disposable income of the first decile by 47.6%, while the average effect over the whole sample is 8.6%. Privileges are less targeted. The absolute volume of privileges received by lower and upper deciles is almost the same (see Figure 10b). Still, the disposable income of lower deciles is more vulnerable to the revision of privileges than the income of upper deciles.

Belarus has a PAYG pension system, which implies that pensions have the nature of transfer rather than deferred income. Pensions reported by households are equal to total public expenditures of 96.2 trillion. Related expenditures of SPF were equal to 83.4 trillion. In addition, non-contributory pensions (provided to retired civil servants and persons retired from national security, defense and law enforcement agencies) were financed from the central government budget at the level of BYR 6.8 trillion. Still, HBS data overshoots actual public expenditures on pensions by 7.3%. This overshooting is related to the structure of the survey sample, which overestimates the actual number of population above working age by 9.5%.

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