A tax system and an influence of economic factors on government tax revenue in ASEAN countries

Abstract

This research studies the structure of tax revenue and the relationship of economic and tax revenue in five founding ASEAN countries, namely Thailand, Singapore, Malaysia, Indonesia, and Philippines. The secondary time series data (panel data) per year from 2002 – 2016 were used. After that, the influence of economic factors on the government tax revenue based on the pooled panel regression analysis were analyzed. The results of study revealed that both the employment rate and Gross Domestic Product of non - agricultural sectors significantly influenced on the total tax revenue in the same direction, having the elastic values 0.17 and 0.18, respectively. However, the ratio of foreign trade to Gross Domestic Product significantly influenced on the total tax revenue in the opposite direction with the elastic value 1.75. Regarding the relationship between economic factors and major government tax revenue, the study showed that Gross Domestic Product per capita significantly influenced the corporate income tax, the personal income tax, and the excise tax revenue in the same direction; however, it reversely had an influence on the general sales tax. Employment relates to the personal income tax, the VAT income tax, and the excise tax significantly in the same direction. Gross Domestic Product outside the agricultural sector correlated with the corporate income tax, the personal income tax, VAT, and the excise tax revenue significantly in the same direction. Finally, the ratio of foreign trade to Gross Domestic Product had an influence on the personal income tax, the VAT income, and the excise tax revenue in the opposite direction significantly.