The factors that determine government tax revenue: a case in Malaysia/ Nur Shaffika Mohd Hassan

Tax is one of the most important fiscal policies for the states and its economy. The developed countries aim of the fiscal policy is to achieve the economic stability. The purpose of this study is to determine the factors that will reduce or increase tax revenue collected by government. The macroeconomic variables that I have taken in consideration in this study are Gross Domestic Product (GDP), inflation rate, unemployment rate, exports and imports of goods and services. This study is using secondary data that is collected from year 2006 to 2015 over ten year period of time. The data that have been collected are obtained from the World Bank, Global Economy and Ministry of Finance. A simple hypothesis is formulated in the null form which states that there is no significant relationship between government tax revenue and macroeconomic variables in Malaysia. This study uses statistical analysis to find out the relationship between all the variables that I have chosen as explanatory ones. Through the uses of logarithmic function we will see how flexible the GDP of Malaysian country related to income from taxes. This paper concludes that Malaysian government should increase government expenditure for the development.