The Determinants of Assessment Tax Collection: The Malaysian Local Authority Experience

  • Mahamad Bin Tayib

    Student thesis: Doctoral Thesis


    The increasing level of non-compliance with payment demands for local property taxes by Malaysian local authority taxpayers over the past decade has given rise to the need to study the efficiency and productivity of the tax administration system a high priority. This important and sensitive issue has not been given the attention that it deserves. Little empirical research on the administration of, and voluntary compliance in, the Malaysian local taxation system been undertaken and this has shaped the motivation for this study, which represents the first detailed analysis of these issues.

    Studies on taxpayer compliance behaviour primarily centre on the income tax system and are mainly based on two models. Firstly, the financial self-interest model and secondly, a model that not only includes economic variables, but also other variables such as demographic, noncompliance opportunities, attitudes and perceptions of taxpayers and the structure of the tax system. The model designed in this work builds on this latter concept to include two further variables - namely quality of service and financial information.

    Two aspects of 'assessment tax 1 collection in Malaysian local authorities are explored in detail. These are, the efficiency and productivity of the assessment tax administration system, and assessment taxpayer compliance behaviour in a sample of Malaysian local authorities.

    The results of this study indicate that there is a significant difference in terms of the efficiency and productivity of the assessment tax administrative systems between local authorities. The study demonstrates that authorities with high collection performance are more efficient and productive when compared to authorities with medium and low tax collection performances. In general, many of the factors identified with efficiency and effectiveness of the assessment tax administration are consistent with the attributes found in the income tax system. In addition, new factors associated with a high-commitment work system approach (Beer ef a/., (1984) and Walton (1985)) are used in the study to explain the performance of local authorities with high tax collection rates. No previous study has combined all aspects of the above variables in investigating the efficiency and productivity of local tax administration systems.

    The findings support the model of taxpayer compliance behaviour designed in this work. These indicate that taxpayers in local authorities with high tax collection performance have positive perceptions towards the items listed in the model. In addition, importantly, the majority of the respondents to this study perceived that the presence of financial information might influence their compliance behaviour toward assessment tax.

    This research has revealed that the attributes of local authorities with high collection performance correspond to earlier studies based on income tax systems. In addition, however, the findings highlight the importance of such factors as the quality of service delivery to taxpayers and work system design in motivating employees to collect local tax revenues. Furthermore, it provides strategic information to all parties involved in the local taxation collection process, especially those local authorities, which are currently confronted with high levels of uncollected assessment tax revenue. Specifically the research has significant implications for the role of government in Malaysia (especially state government) in monitoring assessment tax systems, the work of local authorities and implications for taxpayers' voluntary compliance behaviour.

    This work is expected to make a significant contribution towards building a unified efficient theory of local taxpayer compliance.
    Date of AwardOct 1998
    Original languageEnglish
    SupervisorHugh Coombs (Supervisor) & Jamal Ameen (Supervisor)


    • Local property taxes
    • Malaysia
    • tax administration
    • taxpayer compliance
    • assessment tax

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