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Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data

Economists argued that macroeconomic activity will be affected differently whether through indirect taxes or direct taxes. Therefore, this paper aims to examine the causality relationship between two types of tax categories (direct tax and indirect tax) and major macroeconomic variables based on Mal...

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Main Authors: Zakaria, Z., Nabi, M. H.
Format: Article
Published: American Scientific Publishers 2016
Subjects:
HF Commerce
Online Access:http://eprints.utm.my/id/eprint/71620/
https://www.scopus.com/inward/record.uri?eid=2-s2.0-84985911725&doi=10.1166%2fasl.2016.6618&partnerID=40&md5=19e24d89c5f3cff925fd0243bbddbd7f
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spelling my.utm.716202017-11-15T04:22:29Z http://eprints.utm.my/id/eprint/71620/ Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data Zakaria, Z. Nabi, M. H. HF Commerce Economists argued that macroeconomic activity will be affected differently whether through indirect taxes or direct taxes. Therefore, this paper aims to examine the causality relationship between two types of tax categories (direct tax and indirect tax) and major macroeconomic variables based on Malaysia data, namely consumption, investment, government expenditure and exports. In this paper, the bi-variate causality relationship between direct tax, indirect tax and the macroeconomic variables studied were examined using Granger causality tests that were proposed by Toda and Yamamoto. The data for the analysis consist of quarterly data covering the period from 1996 to 2013. The findings from the causality tests show that in the short run, direct tax in Malaysia causes household consumption and private investment, but not government expenditure and exports. Similarly, indirect tax also causes households consumption and private investment, but not the government expenditure and export. Both types of taxes do not causally affect the level of government expenditure in Malaysia. American Scientific Publishers 2016 Article PeerReviewed Zakaria, Z. and Nabi, M. H. (2016) Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data. Advanced Science Letters, 22 (5-6). pp. 1384-1387. ISSN 1936-6612 https://www.scopus.com/inward/record.uri?eid=2-s2.0-84985911725&doi=10.1166%2fasl.2016.6618&partnerID=40&md5=19e24d89c5f3cff925fd0243bbddbd7f
institution Universiti Teknologi Malaysia
building UTM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Malaysia
content_source UTM Institutional Repository
url_provider http://eprints.utm.my/
topic HF Commerce
spellingShingle HF Commerce
Zakaria, Z.
Nabi, M. H.
Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
description Economists argued that macroeconomic activity will be affected differently whether through indirect taxes or direct taxes. Therefore, this paper aims to examine the causality relationship between two types of tax categories (direct tax and indirect tax) and major macroeconomic variables based on Malaysia data, namely consumption, investment, government expenditure and exports. In this paper, the bi-variate causality relationship between direct tax, indirect tax and the macroeconomic variables studied were examined using Granger causality tests that were proposed by Toda and Yamamoto. The data for the analysis consist of quarterly data covering the period from 1996 to 2013. The findings from the causality tests show that in the short run, direct tax in Malaysia causes household consumption and private investment, but not government expenditure and exports. Similarly, indirect tax also causes households consumption and private investment, but not the government expenditure and export. Both types of taxes do not causally affect the level of government expenditure in Malaysia.
format Article
author Zakaria, Z.
Nabi, M. H.
author_facet Zakaria, Z.
Nabi, M. H.
author_sort Zakaria, Z.
title Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
title_short Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
title_full Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
title_fullStr Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
title_full_unstemmed Direct tax, indirect tax and economic activities in developing countries: empirical evidence based on Malaysia data
title_sort direct tax, indirect tax and economic activities in developing countries: empirical evidence based on malaysia data
publisher American Scientific Publishers
publishDate 2016
url http://eprints.utm.my/id/eprint/71620/
https://www.scopus.com/inward/record.uri?eid=2-s2.0-84985911725&doi=10.1166%2fasl.2016.6618&partnerID=40&md5=19e24d89c5f3cff925fd0243bbddbd7f
_version_ 1643656233740140544
score 13.211869

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