Munich Personal RePEc Archive

The Relationship of Government Revenue and Government Expenditure: A case study of Malaysia

Ullah, Nazim (2016): The Relationship of Government Revenue and Government Expenditure: A case study of Malaysia. Published in:

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Abstract

Malaysia is a developing Islamic state that faced budget deficit since 1998. But it is not accepted by all and hopes that state should be in a position of either balance budget or surplus budget. The optimum level of Government budget is the state where government expenditure is totally offset by source of government revenue and that can be achieved through increasing tax revenue or decreasing expenditure. The aim of this study to find out the theoretical relationship between the revenue and the expenditure in Malaysia using the four hypotheses from literature study. The study finds out that although majority of the government revenue is from direct tax, the government spending only varies due to change in indirect tax revenue and non-tax revenue. Basically the study is analytical in nature and based on data collected from published sources focusing on the impact of the revenue and the expenditure on the continuous development of the Malaysia. Finally, we try to suggest to the authority to follow the proper rules and guidelines at the time policy making whereby they will be able to coup up with the optimum revenue and relevant expenditure in the state.

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