How T20 taxpayers' money can support B40 households: A conceptual fiscal redistribution framework for Malaysia
DOI:
https://doi.org/10.55573/IJAFB.117008Keywords:
B40, progressive taxation, fiscal redistribution, income inequality, tax fairness, tax compliance, MalaysiaAbstract
Income inequality, cost-of-living pressures and differences in household financial resilience remain important socioeconomic concerns in Malaysia. This conceptual paper examines how Malaysia's fiscal system can transform tax revenue disproportionately contributed by higher-income (T20) taxpayers into meaningful socioeconomic support for lower-income (B40) households. Applying a narrative and thematic integrative review of indexed journal literature on progressive taxation, fiscal redistribution, inequality, tax fairness and household vulnerability, the paper situates this literature against Malaysia's operational redistribution infrastructure, including the Central Database Hub (PADU), the Sumbangan Tunai Rahmah (STR) cash-transfer programme and targeted subsidy rationalisation. The synthesis is organised into five interconnected components: progressive tax contribution, government fiscal capacity, redistributive allocation, B40 household outcomes and long-term inclusive development, moderated by targeting efficiency, governance and transparency, and tax fairness and institutional trust. The paper distinguishes protective redistribution, which addresses immediate vulnerability, from productive redistribution, which strengthens education, health, employability, and mobility. Eight testable propositions are derived to guide future empirical research. The study concludes that redistributive effectiveness should be measured by households' net economic well-being after taxes, transfers, and public services, not by gross assistance alone, and recommends stronger progressive fiscal design, multidimensional targeting, and data governance safeguards for centralised targeting systems.
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