Author

  • Siti Nurhazwani Kamarudin

    • Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Terengganu, Kampus Dungun, Malaysia
    • Malaysia

  • Noor Emilina Mohd Nasir

    • Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Terengganu, Kampus Dungun, Malaysia
    • Malaysia

  • Azmira Abdullah

    • Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Sarawak, Kampus Samarahan, Malaysia
    • Malaysia

  • Quihong Liu

    • School of Economics and Management, Panzhihua University, China
    • China

Abstract

This concept paper examines the crucial role of the carbon tax as a novel policy tool to strike a balance between economic development and environmental sustainability in Malaysia. The primary objective of this paper is to investigate the potential of carbon taxation to curtail carbon emissions in Malaysia without compromising its economic growth. This study adopts a qualitative approach, incorporating an extensive review of existing literature on carbon taxation, its implementation experiences in other countries, and Malaysia's current environmental and economic landscape. The analysis reveals that carbon taxation has the potential to incentivize carbon-emitting industries to adopt cleaner technologies and sustainable practices while generating revenue for environmental initiatives. The findings suggest that a carefully designed and wellimplemented carbon tax policy can lead to a more sustainable development path for Malaysia. This paper contributes to the body of knowledge by presenting a comprehensive analysis of the potential of carbon taxation to address climate change issues in the country. The originality lies in bridging the gap between economic growth imperatives and the need for sustainable environmental practices, particularly in the context of an emerging economy. This paper offers valuable guidance to policymakers, businesses, and other stakeholders involved in shaping Malaysia's environmental and economic policies. By understanding the potential benefits and challenges of carbon taxation, policymakers can design effective and efficient policies that foster economic growth while mitigating the adverse impacts of climate change. Moreover, businesses can strategize for a greener future, ensuring long-term competitiveness and sustainability in the global market.

Keywords

References

  • Andersson, J. J. (2019). Carbon taxes and CO2 emissions: Sweden as a case study. American Economic Journal: Economic Policy, 11(4), 1–30. https://doi.org/10.1257/pol.20170144
  • Ardhimansyah, T., & Khaddafi, M. (2024). A study on the management of administrative challenges and market strategies in the implementation of the carbon tax in Indonesia. Advances In Social Humanities Research, 2(7), 979-985. https://doi.org/10.46799/adv.v2i7.270
  • Ariffin, Z. Z., Saad, N., & Mustaphanin, S. M. S. (2024). Unveiling Perspectives on Carbon Tax in the Carbon Emissions Industry. PaperASIA, 40(3b), 12-21. https://doi.org/10.59953/paperasia.v40i3b.108
  • Baumol, W., & Oates, W. E. (1988). The theory of environmental policy. Cambridge University Press.
  • Baranzini, A., van den Bergh, J. C. J. M., Carattini, S., Howarth, R. B., Padilla, E., & Roca, J. (2017). Carbon pricing in climate policy: Seven reasons, complementary instruments, and political economy considerations. WIREs Climate Change, 8(4), 1–17. https://doi.org/10.1002/wcc.462
  • Barker, T., Ekins, P., & Foxon, T. (2007). Macroeconomic effects of efficiency policies for energy-intensive industries: the case of the UK Climate Change Agreements, 2000–2010. Energy Economics, 29(4), 760-778.
  • Carattini, S., Carvalho, M., & Fankhauser, S. (2018). Overcoming public resistance to carbon taxes. Wiley Interdisciplinary Reviews: Climate Change, 9(5), e531. https://doi.org/10.1002/wcc.531
  • Chow, D. S. (2024). Carbon pricing and its role in decarbonising Malaysia. PwC. Retrieved from pwc.com/my/en/perspective/esg/241017-carbon-pricing-in-malaysia.html
  • Cracolici, M. F., Cuffaro, M., & Nijkamp, P. (2010). The measurement of economic, social and environmental performance of countries: A novel approach. Social indicators research, 95, 339-356. https://doi.org/10.1007/s11205-009-9464-3
  • Das Neves Almeida, T. A., Cruz, L., Barata, E., & García-Sánchez, I. M. (2017). Economic growth and environmental impacts: An analysis based on a composite index of environmental damage. Ecological Indicators, 76, 119-130. https://doi.org/10.1016/j.ecolind.2016.12.028
  • Freire-González, J. (2018). Environmental taxation and the double dividend hypothesis in CGE modelling literature: A critical review. Journal of Policy Modelling, 40(1), 194–223. https://doi.org/10.1016/j.jpolmod.2017.11.002
  • Goh, H. H., Xu, Z., Liang, X., Zhang, D., Dai, W., Liu, H., ... & Goh, K. C. (2023). Solving carbon tax challenges with a holistic approach: Integrating evolutionary game theory and life cycle energy solutions. Journal of Cleaner Production, 423, 138817. https://doi.org/10.1016/j.jclepro.2023.138817
  • Goulder, L. H., & Parry, I. W. H. (2008). Instrument choice in environmental policy. Review of Environmental Economics and Policy, 2(2), 152–174. https://doi.org/10.1093/reep/ren005
  • Hasnu, N. N. M., & Muhammad, I. (2022). Environmental issues in Malaysia: Suggestion to impose a carbon tax. Asia-Pacific Management Accounting Journal, 17(1). https://www.doi.org/10.24191/APMAJ.V17i1-03
  • Hong, C.-Y., Huang, C.-H., Li, J.-F., & Tsai, Y.-C. (2018). Environmental tax reform, R&D subsidies and CO2 emissions: View the double dividend hypothesis. International Journal of Energy Economics and Policy, 8(5), 288–293. https://www.econjournals.net.tr/index.php/ijeep/article/view/6699
  • ICAP (2024). International Carbon Act Partnership, ICAP 2024 Status Report Executive Summary, https://icapcarbonaction.com/en
  • Ikram, I. (2024). Malaysia to introduce carbon tax for select industries by 2026 — PM, Budget 2025. The Edge Malaysia. Retrieved from https://theedgemalaysia.com/node/730766
  • IPCC. (2018). Special Report on Global Warming of 1.5°C. Retrieved from https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf
  • George, P. (2024). Carbon Tax: A Catalyst for Malaysia’s Carbon Market?, PwC Malaysia, https://www.pwc.com/my/en/perspective/esg/241121-malaysia-carbon-tax.html
  • Koppl, A., & Schratzenstaller, M. (2023). Carbon taxation: A review of empirical literature. Journal of Economic Surveys, 37(4), 1353–1388. https://doi.org/10.1111/joes.12531
  • Liat, C. N. A. S., Aminudin, E., Lou, E., Teck, G. L. H., Chung, L. P., Zin, R. M., & Zakaria, R. (2022). A review of the carbon tax for the Malaysian construction industry. In M. F. M. Din, N. E. Alias, N. Hussein, and N.S. Zaidi (Eds.), Sustainability Management Strategies and Impact in Developing Countries (Community, Environment and Disaster Risk Management, Vol. 26, pp. 3-13), Emerald Publishing Limited, Leeds. https://doi.org/10.1108/S2040-726220220000026001
  • Lin, B., & Li, X. (2011). The effect of carbon tax on per capita CO2 emissions. Energy Policy, 39(9), 5137–5146. https://doi.org/10.1016/j.enpol.2011.05.050
  • Maestre-Andrés, S., Drews, S., & Van den Bergh, J. (2019). Perceived fairness and public acceptability of carbon pricing: a review of the literature. Climate policy, 19(9), 1186-1204. https://doi.org/10.1080/14693062.2019.1639490
  • Ministry of Economy (2024). The Malaysian Economy in Figures 2024, https://ekonomi.gov.my/en/socio-economic-statistics/malaysian-economy-figures
  • Ministry of Finance. (2019). Economic Outlook and Policy Review. Kuala Lumpur: Government Printing Press.
  • Metcalf, G. E., & Stock, J. H. (2020). Measuring the macroeconomic impact of carbon taxes. AEA Papers and Proceedings, 110, 101–106. https://doi.org/10.1257/pandp.20201081
  • Muhammad, I., Hasnu, N. N. M., & Ekins, P. (2021). Empirical research of public acceptance on environmental tax: A systematic literature review. Environments, 8(10), 109. https://doi.org/10.3390/environments8100109
  • Muhammad, I., Hasnu, N. N. M., Ibrahim, M. A., Abdul Hamid, S., & Mohd Hanefah, M. (2022). Trust in government and its determinants: An empirical study of public acceptability for carbon tax in Malaysia. Sustainability, 14(23), 15684. https://doi.org/10.3390/su142315684
  • Nobanee, H., & Ullah, S. (2023). Mapping green tax: A bibliometric analysis and visualization of relevant research. Sustainable Futures, 6, Article 100129. https://doi.org/10.1016/j.sftr.2023.100129
  • Nakamura, M., Yang, F., & Watanabe, C. (2023). Carbon tax and economic development: A cross-country panel analysis. Journal of Cleaner Production, 401, 136923.
  • Olpah, H., Ambarwati, Suwandi, Bachtiar, W. A., & Ananda, L. D. (2023). The implementation of the carbon tax in Indonesia: regulations, challenges, and its impacts. Jurnal Riset Akuntansi Keuangan, 8(2), 180-193. https://doi.org/10.31002/rak.v8i2.1142
  • Parry, I., Veung, C., & Heine, D. (2015). How much carbon pricing is in countries’ own interests? The critical role of co-benefits. Climate Change Economics, 6(4), 1-26. https://doi.org/10.1142/S2010007815500190
  • Pegels, A. (2016). Taxing carbon as an instrument of green industrial policy in developing countries. Discussion paper (No. 23/2016), German Institute of Development and Sustainability (IDOS).
  • Piluso, N., & Rau, C. (2025). Carbon tax and economic stability: A broader approach to the double dividend of ecological taxation. Journal of Applied Business and Economics, 27(2). https://doi.org/10.33423/jabe.v27i2.7556
  • Semet, R. (2024). Coordinating social equity and emissions: Challenges in carbon tax policy. Energy Policy, 185, 113954.
  • Smith, J. K., & Johnson, A. B. (2021). Global warming and the impact of carbon emissions. Environmental Science Journal, 15(2), 45-58.
  • Sofiyati, R. A., & Hermawan, S. (2023). Tantangan dan Faktor yang Mempengaruhi Penundaan Implementasi Pajak Karbon di Indonesia. Bilancia: Jurnal Studi Ilmu Syariah Dan Hukum, 17(2), 187-208.
  • Statista. (2024). Carbon dioxide (CO2) emissions from energy consumption in Malaysia from 2014 to 2023. https://www.statista.com/statistics/1394260/malaysia-co2-emissions-from-energy-use
  • Sulistiyanti, U., & Falikhatun (2023). Carbon tax: A bibliometric analysis for future research in Indonesia. Jurnal Akuntansi dan Auditing Indonesia, 27(2), 198-207. https://doi.org/10.20885/jaai.vol27.iss2.art8
  • Tan, S.-H., Hong, M., & Chan, T.-H. (2020). Economic Growth, Urbanisation And Carbon Emissions: Evidence From Selected ASEAN Countries. International Journal of Industrial Management, 6, 9-16. https://doi.org/10.15282/ijim.6.0.2020.5637
  • Tan, Z., Wu, Y., Gu, Y., Liu, T., Wang, W., & Liu, X. (2022). An overview of the implementation of environmental tax and related economic instruments in typical countries. Journal of Cleaner Production, 330. https://doi.org/10.1016/j.jclepro.2021.129688
  • Tax Foundation (2025). Carbon Taxes, https://taxfoundation.org/topics/carbon-taxes/
  • Wang, Q., Hubacek, K., Feng, K., Wei, Y.-M., & Liang, Q.-M. (2016). Distributional effects of carbon taxation. Applied energy, 184, 1123-1131. https://doi.org/10.1016/j.apenergy.2016.06.083
  • Wijaya, M. (2023). Complexity of tax aspects in carbon tax implementation. Jurnal Multidisiplin Madani, 3(12), 2585-2595. https://doi.org/10.55927/mudima.v3i12.7294
  • World Bank (2022). State and Trends of Carbon Pricing 2022, https://documents.worldbank.org/en/publication/documents-reports/documentdetail /099045006072224607/p1780300092e910590acb201757ecd54322
  • World Bank (2025). World Bank Carbon Pricing Dashboard, https://carbonpricingdashboard.worldbank.org/
  • Yahoo, M., Salleh, N. H. M., Chatri, F., & Huixin, L. (2024). Economic and environmental analysis of Malaysia's 2025 renewable and sustainable energy targets in the generation mix. Heliyon, 10(9). https://doi.org/10.1016/j.heliyon.2024.e30157
  • Yamazaki, A. (2017). Jobs and climate policy: Evidence from British Columbia's revenue-neutral carbon tax. Journal of Environmental Economics and Management, 83, 197-216. https://doi.org/10.1016/j.jeem.2017.03.003
  • Yan, H., Shen, Q. P., Fan, L. C. H., Wang, Y. W., & Zhang, L. (2010). Greenhouse gas emissions in building construction: A case study of One Peking in Hong Kong. Building and Environment, 45(4), 949–955. https://doi.org/10.1016/j.buildenv.2009.09.014

Downloads

No downloads have been recorded for this article yet. Figures appear here once readers begin downloading the full text.

How to Cite

Kamarudin, S. N., Mohd Nasir, N. E., Abdullah, A., & Liu, Q. (2025). Balancing Growth and Sustainability: The Role of Carbon Tax in Malaysia. Information Management and Business Review, 17(2(I)S), 39-50. https://doi.org/10.22610/imbr.v17i2(I)S.4564

Share this article

License

Copyright (c) 2025 Siti Nurhazwani Kamarudin, Noor Emilina Mohd Nasir, Azmira Abdullah, Quihong Liu (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team  edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.

Keywords

Section

Research Paper

Published in

Vol. 17 No. 2(I)S (2025) AI in Audit, Workplace Safety & Digital Consumer Society View issue contents

Published

2025-08-10

Submissions

Have research to publish? Information Management and Business Review welcomes submissions.

Make a Submission