Assessment Tax Management Model of Local Governments in Malaysia

Abstract

Tax management by local governments has become more challenging due to robust developments. Assessment tax revenue is the main income for local governments which are used to pay for services and maintenance in the local government administrative areas. However, the amount of revenue collected is decreasing due to the serious problem of assessment tax arrears that affect the administrative system and as a corollary, the delivery of services by local governments. This paper represents a preliminary write-up of a Ph.D. research to identify the legal and policy framework involved in the administration of local governments and to particularly review the performance of the Malaysian local government assessment tax collection. This paper will also examine present practices and regulatory barriers in the management of assessment tax to enable the formulation of a model that can best explain the policies, rules and guidelines to solve the collection problem of assessment tax. Hence, the aim of this paper is to establish a assessment tax management model based on best practices. The study involves all local governments in Malaysia. Assessment tax collection statistics for the research include the total revenue and assessment tax arrears for each local government in Malaysia within five years from 2004 until 2008. Respondents for this research involve officials at the Department of Local Government within the administrative areas of local governments in Peninsular Malaysia, Sabah and Sarawak.