Sectoral responses, macroeconomic impact and household welfare: GST Policy for Malaysia economy / Juliana Mohd Abdul Kadir, Mohamed Aslam Gulam Hassan and Zarinah Yusof

Mohd Abdul Kadir, Juliana and Gulam Hassan, Mohamed Aslam and Yusof, Zarinah (2020) Sectoral responses, macroeconomic impact and household welfare: GST Policy for Malaysia economy / Juliana Mohd Abdul Kadir, Mohamed Aslam Gulam Hassan and Zarinah Yusof. Jurnal Intelek, 15 (1). pp. 21-39. ISSN 2682-9223

Abstract

Goods and services tax (GST) has been a controversial topic in Malaysia when it was first implemented. This study examines the impact of the GST on the Malaysian economy from three major perspectives. First, it investigates the consequent changes in sectoral responses, including output and prices for 15 main sectors. Second, the study presents the results of GST impact on seven macroeconomic variables, namely, consumption, investment, government revenue, government expenditure, export, import, and gross domestic product. Third, the results of household welfare are discussed. A computable general equilibrium model is utilized to simulate GST impact on the Malaysian economy, and a simple comparative static model is performed. The results prove that the higher the GST rate, the higher is the impact on each sector. The sectors most affected by GST are communication and ICT, and the electricity and gas sectors. By contrast, agriculture, forestry and logging, and the petroleum and natural gas sectors are the least affected. Consumption and investment receive the largest negative effect, whereas government revenue and expenditure show the largest positive effect. The study likewise finds that by lowering GST rate, the welfare loss was minimized and the higher-income groups were affected more than the lower-income groups

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Item Type: Article
Creators:
Creators
Email / ID Num.
Mohd Abdul Kadir, Juliana
UNSPECIFIED
Gulam Hassan, Mohamed Aslam
UNSPECIFIED
Yusof, Zarinah
UNSPECIFIED
Subjects: H Social Sciences > HB Economic Theory. Demography > Macroeconomics
H Social Sciences > HC Economic History and Conditions > Consumers. Consumer demand. Consumption
H Social Sciences > HJ Public Finance > Tax collection. Taxpayer compliance
Divisions: Universiti Teknologi MARA, Perlis > Arau Campus
Journal or Publication Title: Jurnal Intelek
UiTM Journal Collections: UiTM Journal > Jurnal Intelek (JI)
ISSN: 2682-9223
Volume: 15
Number: 1
Page Range: pp. 21-39
Keywords: Computable General Equilibrium. Goods and services tax. Malaysia.
Date: February 2020
URI: https://ir.uitm.edu.my/id/eprint/42879
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