ISSN: 2222-6990
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This study analyses the relationship between tax revenue and economic performance in six major ASEAN economies, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, from 2000 to 2024. The study also examines whether trade openness and government effectiveness change the relationship between tax revenue and economic growth. Economic growth is represented by the natural logarithm of GDP per capita, while tax revenue is measured as a percentage of GDP. By applying a Fixed Effects panel model with robust standard errors, the results show that tax revenue does not have a statistically significant direct relationship with economic growth. The interaction between tax revenue and trade openness, as well as the interaction between tax revenue and government effectiveness, is also insignificant. This means that both moderating variables do not significantly change the tax revenue-growth relationship in the ASEAN-6 sample. However, government effectiveness, government expenditure, and foreign direct investment show positive and significant effects on economic growth. These findings suggest that institutional quality, effective public spending, and productive foreign investment are more important in explaining economic performance than tax revenue and trade openness alone. Therefore, ASEAN-6 policymakers should improve government effectiveness, strengthen tax administration, increase public spending efficiency, and attract productive foreign direct investment to support sustainable economic growth.
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