The effects of house price and taxation on consumers’ burden: The case of Malaysia

  • Norsiah Ahmad School of Accountancy, Faculty of Business and Management, Universiti Sultan Zainal Abidin, 21300 Kuala Nerus, Terengganu, Malaysia
  • Roshaiza Taha Accounting Programme, Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, 21300 Kuala Nerus, Terengganu, Malaysia
  • Wan Anisah Endut School of Accountancy, Faculty of Business and Management, Universiti Sultan Zainal Abidin, 21300 Kuala Nerus, Terengganu, Malaysia
  • Saeed Rabea Ali Baatwah Accounting Department, College of Business Administration, Shaqra University, 17521 Afif, Riyadh, Saudi Arabia
Keywords: consumer burden, consumer price index, goods and services tax, housing prices, income tax

Abstract

Despite being heavily regulated as housing industry is highly controlled by a range of pertinent and critical laws to be complied (Nuruddin, Syed Abu Bakar, & Jaafar, 2015), housing prices in Malaysia have increased significantly over recent years, especially in more developed areas. Since 2010, the loan for purchasing residential property is consistently dominating the overall household loan portfolio (Central Bank of Malaysia, 2019). Though the income level has improved over the years, the rising cost of living resulting from inflation as well as the changes in tax environment has exceeded the increase in household income. To worsen the situation, the indirect tax reformation from Sales and Service Tax (SST) to Good and Services Tax (GST) in 2015 and back to SST in 2018 resulted in instability in housing price with negative growth in the quarter year when the changes took place at -2.6 percent and -0.9 percent respectively (National Property Information Centre [NAPIC], 2018) and rebound in the short term period as these changes may affect the price of goods and services as well as demand and supply. This paper examines the effect of house price on consumer burden by applying Granger causality test. Based on the results, we can summarize that consumer burden has significant effects on both direct tax and indirect tax and housing price index is only significant to direct tax implying that any policy changes that affect the purchasing power of citizens may affect the revenue collection by the government.

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Published
2021-04-30
Section
Research articles