Impact of taxation on economic growth in Asean countries

• Main Author: Gajeintdran, Mathraveeran
• Format: Thesis
• Language: English; English
• Published: 2021
• Subjects: HJ4771.6 Income Tax. Tax Returns.
• Online Access: https://etd.uum.edu.my/9562/1/s826067_01.pdf; https://etd.uum.edu.my/9562/2/s826067_02.pdf; https://etd.uum.edu.my/9562/

Taxes affect the allocation of resources and often distort the economic growth. This study uses the ordinary correlation, cross country correlation, and least-squares regression analysis method to study the impact of direct tax and indirect tax on economic growth in Malaysia and some of neighbouring countries such as Singapore, Thailand and Indonesia for the years of 2010 to 2019. The data was obtained from the World Bank website. Theoretically, tax collections generate the budgeted revenue and are used to regulate the economy. The result of statistical tests showed that tax has a positive impact on Malaysia’s economic growth. However, the impacts of types of tax i.e. direct tax and indirect tax on economic growth are different. The indirect tax especially Sales and Services Tax (SST)/ Goods and Services Tax (GST)/ Value Added Tax (VAT) positive influence and promote economic growth of Malaysia, Singapore, Thailand and Indonesia, while the impact of direct tax is visible for some cases. The result of this research shows the GST/SST/ VAT (TIND) explained 59.2% of the GDP in Malaysia; 92.8% of GDP Thailand; 98.7% of GDP Indonesia and 97.2% GDP Singapore. Indirectly its shows strong impact of taxation especially TIND on economic growth in all countries being studied. There is sufficient evidence to confirm that the indirect tax has a more positive impact than direct tax.