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FACTORS INFLUENCING STUDENTS INTENTION TO SPEND UNDER GOODS AND SERVICES TAX REGIME
AHMED OBAID MAHMOOD
MASTER OF SCIENCE
(INTERNATIONAL ACCOUNTING) UNIVERSITI UTARA MALAYSIA
OCTOBER 2018
FACTORS INFLUENCING STUDENTS INTENTION TO SPEND UNDER GOODS AND SERVICES TAX REGIME
by
AHMED OBAID MAHMOOD
Research Paper Submitted to
Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia,
In Partial Fulfillment of the Requirement for the Master of Science
(International Accounting)
Permission to Use
In presenting this project report in partial fulfilment of the requirements for a postgraduate degree from Universiti Utara Malaysia, I agree that the Universiti Library may make it freely available for inspection. I further agree that permission for the copying of this report in any manner, in whole or in part, for scholarly purpose may be granted by my supervisor or, in their absence, by the Dean of Othman Yeop Abdullah Graduate School of Business. It is understood that any copying or publication or use of this report or parts thereof for financial gain shall not be allowed without my written permission. It is also understood that due recognition shall be given to me and to Universiti Utara Malaysia for any scholarly use which may be made of any material from my report.
Requests for permission to copy or to make other use of materials in this project report, in whole or in part, should be addressed to:
Dean of Othman Yeop Abdullah Graduate School of Business Universiti Utara Malaysia
06010 UUM Sintok Kedah Darul Aman
Abstract
The main way to collect the government revenue from individuals, companies and the other entities is by using tax. There are several types of taxes that the people have to pay, one of those is goods and services tax (GST) which consider as broad-based that cover almost all the transactions including the goods and services that imported, except the one that assorted as zero supply and exempt supply thus it will be exempt by the government. This study aims to investigate how this tax will affect the student spending behavior by using the theory of planned behavior (TPB) by determining the level of each of the factors which are attitudes, subjective norms, GST knowledge, government subsidies and the intention to spend among postgraduate student in Universiti Utara Malaysia (UUM). Also, by determining the relationship between attitudes, subjective norms, GST knowledge, government subsidies and the intention to spend among postgraduate student in UUM. Furthermore, this study attempts to provide some insight into the government in order to rise the student spending. This study done based on 360 questionnaires that have been responded by the postgraduate students of UUM. In this study five metrics of variables have been used, one dependent (student intention to spend) and four independents (attitude, subjective norms, GST knowledge and government subsidy). Descriptive and inference analysis were used for this study to describe the variables and to test the hypotheses. All variables are significantly affecting the intention to spend under GST among postgraduate students.
Keywords: attitude, subjective norms, government subsidy, GST knowledge, intention to spend.
Abstrak
Kaedah utama untuk mengutip hasil daripada individu, syarikat dan entiti lain adalah melalui cukai. Ada beberapa jenis cukai yang dibayar oleh rakyat dan salah satunya ialah cukai barangan dan perkhidmatan (GST) yang dianggap berasaskan sempadan yang luas merangkumi hampir segala urusniaga termasuk barangan dan perkhidmatan yang dimpot kecuali bekalan berasaskan sifar dan bekalan yang dikecualikan oleh kerajaan. Kajian ini adalah untuk menyiasat bagaimana cukai ini akan memberi kesan kepada gelagat perbelanjaan pasca siswazah dengan menggunakan Teori Gelagat Terancang (TGT) dengan menentukan tahap setiap faktor iaitu sikap, norma subjectif, pengetahuan GST, subsidi kerajaan dan niat perbelanjaan di kalangan pasca siswazah di Universiti Utara Malaysia. Hubungan antara sikap, norma subjectif, pengetahuan GST, subsidi kerajaan dan niat perbelanjaan di kalangan pasca siswazah di UUM juga akan dikaji. Kajian ini akan memberikan sedikit input untuk membantu kerajaan meningkatkan perbelanjaan pelajar. Kajian ini dijalankan berasaskan kepada 360 soal selidik yang diterima dari pelajar pasca siswazah Universiti Utara Malaysia. Dalam kajian ini lima angkubah telah digunakan, satu angkubah bersandar (niat perbelanjaan pelajar) dan empat angkubah tidak bersandar (sikap, norma subjektif, subsidi kerajaan dan pengetahuan GST). Analisa deskriptif dan inferen telah dilakukan untuk menjelaskan angkubah- angkubah kajian dan untuk menguji hipotesis. Dapatan kajian menunjukkan kesemua angkubah tidak bersandar mempengaruhi secara signifiken niat untuk berbelanja di bawah GST dikalangan pelajar pasca siswazah.
Kata kunci: sikap, norma subjektif, subsidi kerajaan, pengetahuan terhadap GST, niat untuk berbelanja
Acknowledgement
First and foremost, this humble gratitude goes to Allah as without His guidance I would never complete this hardship journey. It is not an easy journey without the blessing and du’a from my parents; Obaid Mahmood and Nawres Shahadha, because without them, I am like a lost sailor in the vast ocean. I would like to dedicate my gratefulness for the best siblings in the world for my sisters and brothers who always stand by my side and reminds me that I could be the best at least in their eyes. Not to forget my supervisor, Dr. Munusamy Marimuthu who, with his patience and guidance has led me to the final mark of this project paper. Last but not least, I would like to deliver this heartfelt gratefulness for Ahmed Munadhil and Puteri Ily Ismail as they are friends who always there to support me when I’m morally down and live up my spirit.
Ahmed Obaid Mahmood
Table of Contents
Permission to Use ... i
Abstract ... ii
Abstrak ... iii
Acknowledgement... iv
Table of Contents ... v
List of Tables... ix
List of Figures ... x
List of Appendices ... xi
List of Abbreviations... xii
CHAPTER ONE: INTRODUCTION 1.1 Introduction ... 1
1.2 Problem Statement ... 3
1.3 Research Questions ... 5
1.4 Research Objectives ... 5
1.5 Significant of the Study ... 6
1.6 Scope and Limitation of the Study ... 7
1.7 Definitions of Key Terms... 8
1.8 Organization of the Thesis ... 9
CHAPTER TWO: LITERATURE REVIEW 2.1 Introduction ... 10
2.2 Goods and Services Tax ... 11
2.3 Theory of Planned Behavior ... 16
2.4 Intention in Spending ... 17
2.5 Attitude and Intention to Spend ... 19
2.6 Subjective Norms and Intention to Spend ... 20
2.7 Perceived Behavioral Control and Intention to Spend ... 21
2.7.1 GST Knowledge and Intention to Spend ... 21
2.7.2 Government Subsidy and Intention to Spend ... 23
2.8 Summary ... 24
CHAPTER THREE: METHODOLOGY
3.1 Introduction ... 25
3.2 Research Framework ... 25
3.3 Development of Hypotheses ... 26
3.3.1 Attitude and Intention to Spend ... 26
3.3.2 Subjective Norms and Intention to Spend ... 27
3.3.3 GST Knowledge and Intention to Spend ... 27
3.3.4 Government Subsidy and Intention to Spend ... 28
3.4 Research Design ... 29
3.5 Operational Definition ... 29
3.5.1 Intention to Spend ... 29
3.5.2 Attitude ... 30
3.5.3 Subjective Norms ... 30
3.5.4 GST Knowledge ... 30
3.5.5 Government Subsidy ... 31
3.6 Measurement of Variables/Instrumentation ... 31
3.7 Data Collection... 32
3.8 Population ... 33
3.8.1 Sampling ... 33
3.8.2 Sampling Size ... 33
3.8.3 Sampling Technique ... 35
3.9 Data Collection and Procedures ... 36
3.9.1 Data Processing ... 36
3.9.2 Data Editing ... 36
3.9.3 Data Cleaning ... 37
3.10 Techniques of Data Analysis ... 37
3.10.1 Scale Measurement ... 37
3.11 Summary ... 38
CHAPTER FOUR: RESULT
4.1 Introduction ... 39
4.2 Sample Profile ... 39
4.3 Demography Analysis ... 40
4.4 Descriptive for Constructs... 42
4.4.1 Intention to Spend ... 42
4.4.2 Attitude ... 43
4.4.3 Subjective Norms ... 43
4.4.4 GST Knowledge ... 44
4.4.5 Government Subsidy ... 45
4.5 Reliability Analysis ... 46
4.6 Factor Analysis ... 47
4.6.1 Intention to Spend ... 47
4.6.2 Attitude ... 48
4.6.3 Subjective Norms ... 49
4.6.4 GST Knowledge ... 50
4.6.5 Government Subsidy ... 51
4.7 Multiple Regression Analysis ... 52
4.7.1 Assumptions Test for Multiple Regression ... 52
4.7.2 Multiple Regression Result ... 55
4.7.3 Hypotheses Testing ... 56
4.8 Summary of Hypotheses Testing ... 57
4.9 Summary ... 58
CHAPTER FIVE: DISCUSSION, CONCLUSION & RECOMMENDATION 5.1 Introduction ... 59
5.2 Summary ... 59
5.3 Discussion on Result ... 60
5.4 Implication ... 62
5.4.1 Theoretical ... 62
5.4.2 Practical ... 63
5.5 Limitations ... 64
5.6 Recommendations ... 65 5.7 Conclusion ... 65 REFERENCES ... 67
List of Tables
Table 2.1 The Countries Applied GST ... 11
Table 3.1 The Measurement of the Variables ... 31
Table 3.2 Samples Divided Based on the Schools of UUM ... 35
Table 3.3 Thumb Cronbach Alpha Rules ... 38
Table 4.1 Respondents Table ... 40
Table 4.2 Respondents Profile ... 41
Table 4.3 Mean Analysis for Intention. ... 42
Table 4.4 Mean Analysis for Attitude ... 43
Table 4.5 Mean Analysis for Subjective Norms ... 44
Table 4.6 Mean Analysis for GST Knowledge ... 45
Table 4.7 Mean Analysis for Government Subsidy ... 46
Table 4.8 Reliability Analysis ... 46
Table 4.9 Factor Analysis for Intention ... 47
Table 4.10 Factor Analysis for Attitude ... 48
Table 4.11 Factor Analysis for Subjective Norms ... 49
Table 4.12 Factor Analysis for GST Knowledge ... 50
Table 4.13 Factor Analysis for Government Subsidy ... 51
Table 4.14 Results of Skewness and Kurtosis Test ... 53
Table 4.15 Results of Pearson Correlation Coefficient Test ... 54
Table 4.16 Multiple Regression Result ... 55
Table 4.17 Coefficient Analyses for Intention Model ... 56
Table 4.18 Summary of Hypotheses Testing ... 58
List of Figures
Figure 1.1 Malaysia Consumer Spending for the Years from Jul-2017 to Jan-2018 ... 4
Figure 2.1 General Concept of GST ... 15
Figure 2.2 Theory of planned behaviour ... 16
Figure 3.1 Framework of the study ... 26
List of Appendices
Appendix A Sampling of the Questionnaire ... 72 Appendix B Reliability Output ... 77
List of Abbreviations
Abbreviation Full Name
GST Goods and Services Tax
VAT Value Added Tax
TPB Theory of Planned Behavior
UUM Utara Universiti Malaysia
RMCD Royal Malaysian Customs Department
AHSGS Awang Had Salleh Graduate School
OYAGSB Othman Yeop Abdullah Graduate School of Business
GSGSG Ghazali Shafie Graduate School of Government
INT Intention to Spend
ATT Attitude
SN Subjective Norms
GS Government Subsidy
GSTK GST Knowledge
SPSS Statistical Package for the Social Sciences
CHAPTER ONE INTRODUCTION
1.1 Introduction
Tax considered as the most significant source for the income of the governments to improve the economic and to achieve to the level of a developed country with a high income. Due to the reason that the tax has a high impact on the development of the country, so the low level of the tax will influence the country development. Thus, this will lead to deficit the country financial position (Gurusamy, 2018). In fact, there is instability regarding the behavior of the spending and this un stability is differ with the different generations. According to Beh (2013) stated that the highest category of the spending is the consumer spending, it’s almost three quarter the overall spending.
Usually the consumers’ behaviors are used to determine the country economic condition. Thus, it’s important to know and understand the spending behavior of the consumers especially when there is a change in the policy of the country such as implementation of goods and services tax (Beh, 2013).
The GST is representing the abbreviation for the name of goods and services tax, generally GST known as VAT which is the abbreviation for the name of value added tax. GST is a tax that collected by the government upon the definitive purchase consumption. Moreover, there is more cost on the consumers since the implementation of the goods and services tax due to the fact that the goods and services tax is consumption tax, so there could be changes in the spending behavior of the consumers (Gelardi, 2013). In some countries the level of the consumption increased in the first months before applying the goods and services tax, and then it
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Appendix A
Sampling of the Questionnaire
Dear Sir/Madam,
I am a Masters Student at Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia conducting a research for the purpose of academic exercise and part of the requirement for the award of Master of Science (International Accounting) Degree.
This questionnaire is aim at obtaining your valuable opinion. Your response will be treated with the ultimate confidence and used strictly for academic purpose. The questionnaire is expected to take only about 10 minutes of your precious time to complete. I greatly appreciate your participation in the study. Thank you for your cooperation and giving part of your time for the survey.
Researcher,
Ahmed Obaid Mahmood Matric no: 822362
Master of science (International Accounting) Tel No: 01112479476
E-mail: ahmedalzawb3ee@gmail.com
SECTION A: Demographic profile:
Please tick [√] against the appropriate responses or fill in the blanks with the appropriate
Answers:
1. Gender:
a. [] Male b. [] Female 2. Age:
a. [] less than 25 b. [] 25-35 c. [] 36-45 d. [] 46 and above 3. Marital Status:
a. [] Single b. [] Married c. [] divorced d. [] other:
____________
4. Highest Educational level:
a. [] Master Degree b. [] PHD 5. College:
a. [] Othman yeop Abdullah b. [] Awang had salleh c. [] Ghazali shafie 6. Nationality:
a. [] Local b. [] International 7. Race:
a. [] Malay b. [] Chinese c. [] Indian d. [] other: ____________
SECTION B:
Below are statements regarding students’ intention to spend. Please state your level of agreement for each of the following statements. Please circle your response according to the following scale.
Strongly Disagree Strongly Agree
1 2 3 4 5
No. Statement
1 My intention to spend differs after the implementation
of GST than before. 1 2 3 4 5
2 I intend to spend more on my basic needs after the
implementation of GST. 1 2 3 4 5
3 I intend to spend under the GST regime because it
contributes to the development of Malaysia. 1 2 3 4 5 4 My intention to spend after the GST is affected by my
knowledge about GST. 1 2 3 4 5
5 I intend to spend after the implementation of GST if I
know that the government will provide more services. 1 2 3 4 5 SECTION C:
Below are statements regarding students’ attitudes on spending behavior. Please state your level of agreement for each of the following statements. Please circle your response according to the following scale.
Strongly Disagree Strongly Agree
1 2 3 4 5
No. Statement
1 I would be upset if did not spend to satisfy my needs
under the GST regime. 1 2 3 4 5
2 After the implementation of GST, I often spend money
spontaneously. 1 2 3 4 5
3 Under the GST regime, I spend without thinking. 1 2 3 4 5 4 I believe I have a moral obligation to spend to satisfy
my needs even after GST. 1 2 3 4 5
5 I would feel guilty if I do not spend after the
implementation of GST. 1 2 3 4 5
SECTION D:
Below are statements regarding students’ subjective norms on spending behavior.
Please state your level of agreement for each of the following statements. Please circle your response according to the following scale.
Strongly Disagree Strongly Agree
1 2 3 4 5
No. Statement
1
Most people who are important to me think that I should spend under the GST regime to satisfy my
needs.
1 2 3 4 5
2 After the implementation of GST, people who are
important to me encourages me to spend. 1 2 3 4 5
3
Generally, I would do what I believe most people who are important to me would do to satisfy my needs even
after the implementation of GST.
1 2 3 4 5
4 Most people who are important to me would respect
me if I spend after GST. 1 2 3 4 5
5 After the implementation of GST, I spend like what
people who are important to me would do. 1 2 3 4 5 SECTION E:
Below are statements regarding students’ GST Knowledge on spending behavior.
Please state your level of agreement for each of the following statements. Please circle your response according to the following scale.
Strongly Disagree Strongly Agree
1 2 3 4 5
No. Statement
1 I know GST is collected by the agent. 1 2 3 4 5
2 I know that I must pay GST for certain product. 1 2 3 4 5
3 I know products or services which are zero rated of
GST. 1 2 3 4 5
4 I know products or services which are exempted rated of
GST. 1 2 3 4 5
5 I know products or services which are standard rated of
GST. 1 2 3 4 5
6 I know receipt must state GST registration numbers. 1 2 3 4 5
SECTION F:
Below are statements regarding Government subsidy for students on spending behavior. Please state your level of agreement for each of the following statements.
Please circle your response according to the following scale.
Strongly Disagree Strongly Agree
1 2 3 4 5
No. Statement
1 The support from the government help me to spend after
the implementation of GST. 1 2 3 4 5
2 Under the GST regime my desire to spend depends on
the subsidy provided by the government 1 2 3 4 5 3 Government subsidy under the GST implementation
encourages me to spend more. 1 2 3 4 5
4 My intention to spend after the GST depends heavily on
government subsidy. 1 2 3 4 5
5
After the implementation of GST, most of my spending on things like oil and food that have subsidy from the
government.
1 2 3 4 5
Appendix B Reliability Output
Intention
Attitude
Subjective Norms
GST Knowledge
Government Subsidy
