From Taxes to Prosperity: The Role of Tax Revenue in Malaysia’s Economic Growth
DOI:
https://doi.org/10.33736/uraf.8598.2024Keywords:
tax revenue, economic growth, profits and capital gain (PCG), social security contributions (SCC), taxes on goods and services (TGS), taxes on properties (TP), other taxes (OT)Abstract
This study examines the relationship between Malaysia economic growth and tax revenue. The data were taken from year 2011 to 2020 from the World Bank and OECD. The data were analyzed using the descriptive analysis, correlation, Variance Inflation Factor (VIF), and Ordinary Least Squares (OLS). This study reveals a high and positive link between OT and GDP and between SCC and GDP, a very strong and positive relationship between PCG and GDP, a very weak and negative relationship between TGS and GDP, and a moderate and negative relationship between TP and GDP. In conclusion, the study on the relationship between tax revenues and economic growth in Malaysia has significant policy consequences and provides insightful information. The awareness of this association may help lawmakers create fiscal policies that encourage sustained economic growth, including the right tax rates, incentives, and structures. Furthermore, it could assist with resource allocation, budget planning, and predicting future tax revenues.
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