Empowering future taxpayers: The role of tax literacy in students' financial preparedness

Abstract

Tax literacy is a crucial aspect of students' financial readiness, particularly as they prepare to enter the workforce. However, the level of tax education, tax knowledge and awareness among students requires attention to ensure they understand their future obligations as taxpayers. This study discusses the roles of tax education, tax knowledge, tax awareness, and tax literacy in enhancing students' financial readiness. Based on Financial Literacy Theory, the study highlights tax knowledge as an essential foundation for understanding taxation, while tax awareness encourages individuals to appreciate and fulfil their tax responsibilities. Tax literacy enables students to apply tax related knowledge to real life financial situations, including income management and financial planning. The study also emphasizes the importance of tax education in higher education institutions as a means of early exposure to cultivate knowledgeable, aware, and responsible taxpayers. Overall, strengthening tax literacy can support better financial decision making and enhance students' financial readiness as future taxpayers.