Assessment of Potential Non-Tax Revenue in Malaysian Local Authorities

Abstract

Non-tax revenue trends and their potential have received less attention than propertytax, which is the primary source for most Malaysian local authorities (LAs). This paperhighlights the examination conducted on potentials and strategies adopted by eachLA investigated to maximize return from non-tax revenue. In doing this, qualitativeapproach using secondary data acquired from financial reports and primary data fromin-depth interviews was employed. Ten LAs were selected through purposive sampling.The trend of revenue collection among the selected LAs and the strategies to improvenon-tax revenue collection through thematic analysis are highlighted. The analysisof the trend of local authorities’ revenue reveals that non-tax revenue remains thesecond most important after the tax revenue. However, Pulau Pinang City Council(MBPP) is the only LA that records an average of non-tax revenue exceeding 50 percent of its total internal revenue. This study has also found that the divergence amongthe local authorities’ non-tax revenue collection is due to the revenue improvementstrategies adopted by each local authority. Therefore, eight recommendations aremade to improve non-tax revenue. Though this study is limited to 10 LAs as sample, thesuccessful optimizing strategies highlighted from the study can represent an efficientmodel for other LAs, in improving their non-tax collection.