Optimization model for consumption taxation in Malaysia: a case study of goods and services tax
This thesis describes the development of an optimization model and its application for consumption taxation in Malaysia. Its main idea was to propose the model, which is an individual model, linked together with firm and government behaviours, in the case of taxation in Malaysia, where goods a...
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| Format: | Thesis |
| Language: | English English English |
| Published: |
2020
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| Subjects: | |
| Online Access: | http://eprints.uthm.edu.my/1126/1/24p%20NURUL%20FARHAINI%20RAZALI.pdf http://eprints.uthm.edu.my/1126/2/NURUL%20FARHAINI%20RAZALI%20COPYRIGHT%20DECLARATION.pdf http://eprints.uthm.edu.my/1126/3/NURUL%20FARHAINI%20RAZALI%20WATERMARK.pdf |
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| Summary: | This thesis describes the development of an optimization model and its application for
consumption taxation in Malaysia. Its main idea was to propose the model, which is
an individual model, linked together with firm and government behaviours, in the case
of taxation in Malaysia, where goods and services tax (GST) is considered. For all the
median household income groups of T20, M40, and B40 being studied, the
consumption levels for the current and future periods are set to be the decision
variables. In the proposed model, the respective utility function was maximized, where
the related budget constraints were satisfied. It was highlighted that, some firm
behaviours affected the individual’s utility level, while the government consumption
covered both individual and firm. The Lagrange multiplier method was applied to
solve the proposed model. The first-order necessary conditions for the model were
derived and the computational solutions were obtained in the Excel spreadsheet
environment, with the consumption tax varied in the range of 5 to 7 percent. The results
obtained revealed that, all of the individual’s populations were burdened by the GST
implementation, while the government consumption increased. It was also showed
that, the appropriate consumption tax rate for the individual and for the government is
5 percent and 7 percent, respectively. Moreover, since there were three situations
considered for tax reform, namely, varying the consumption tax rate, cutting the real
property gains tax rate and varying the transfers, it is expected that, the Malaysia
taxation policy guidelines could be further improved. In conclusion, the optimization
model on the consumption taxation in Malaysia was proposed. Besides the Lagrange
multiplier method was successfully applied to solve the optimization model. Lastly,
the usefulness of the proposed optimization model for Malaysia was successfully
validated. The findings of this study could be used to provide a useful guideline for
setting the Malaysian consumption taxation policy in the future. |
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