ASEAN Fiscal and Taxation Policy: Comparative Studies between Malaysian Taxation System and Selected ASEAN Countries towards a Sustainable Economic Development

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue V, May 2019 | ISSN 2454–6186

ASEAN Fiscal and Taxation Policy: Comparative Studies between Malaysian Taxation System and Selected ASEAN Countries towards a Sustainable Economic Development

Kasim Mansur

Universiti Malaysia Sabah.

Abstract: – In general taxes play a repressing role in an economy. Any new forms of taxation, changes in tax regime or rates results in greater economic activities, change consumption pattern, influence jobs market and therefore effect on economic growth. In most ASEAN countries the element of competition among member countries are visible by lowering corporate tax rates and each try to attract FDI in boosting economic growth. On the other hand ASEAN member countries are also trying to make personal tax rates lower in order to fulfill their political agenda at home. It is evident that in most ASEAN countries having lower tax rates have better prospects for economic growth. However, small tax revenue is limiting governmental spending and might cause imbalances in the economy. In the contact of Malaysian taxation system taxes play a very important factors for a sustainable growth of the economy. Thus, there is a positive relationship between taxation and economic development. This conceptual paper aimed to review the efficiency of taxation in terms of sustainable economic development and to discuss the factors that contribute to economic growth. This paper is also attempt to do comparative analysis among Malaysia and selected ASEAN countries how tax system have impacted the growth particularly on GDP. In general the results suggest that the tax rates implemented as well as tax revenue collected in the past years could have impacted the growth and synergized the phase of development.

Key words: taxation, ASEAN, economic sustainability, development, fiscal policy

I. INTRODUCTION

Taxation refers to the practice of government collecting money from its citizens to finance for public services. Without taxation, there would be no public amenities such as schools, hospitals, roads, bridges, and others. Taxation system is a means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results and promote construction

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