Abstract

This study looks at one of the many tools to promote environmental sustainability, namely environmental taxation. This research identifies the gaps between current Malaysian tax laws and practices in the countries reviewed, as well as the desires of Malaysian tax payers which are not practiced in other countries. 

A mixed-method approach was used in this study. In the qualitative method focus groups and interviews involving 30 experts from various disciplines thoroughly explored what taxpayers want from environmental taxation laws. The quantitative approach entailed emailing a set of questionnaires to more than 700 respondents.

The researcher developed and tested the environmental taxation acceptance model and its variables. In the model, the taxpayer engages in voluntary compliance, forced compliance or non-compliance with environmental tax laws. 

The findings show that education level, income source, domicile status and political affiliation do not determine whether one supports environmental tax issues; rather gender, age and race are significant determinants.  Environmental taxation does plays role in encouraging good environmental behaviour; however, it only performing a supporting role in encouraging environmental preservation. Public education about good environmental behaviour, enforcement of environmental laws and supporting services should be practised along with environmental taxation laws.

Behavioural factors, such as quality of life, self-actualisation and attitudes, and legal factors, such as immediate tax incentives, forced compliance and tax mitigation, are the underlying factors in the acceptance of environmental taxation by the Malaysian taxpayer. Attitudes were the least important independent variable while quality of life was the most important variable in the successful acceptance of environmental taxation.

This study highlights the impeding factors in the theoretical framework that might change the outcome of acceptance of environmental taxation, including amount of the tax and the tax administration, current subsidy structure, culture, supporting infrastructure, public goods and governance issues.

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