Taxing for Sustainability: Australia and Malaysia’s Fiscal Path to a Circular Economy

This paper investigates the alignment of tax policy with circular economy goals in Australia and Malaysia, two resource-dependent nations committed to achieving net-zero emissions by 2050. While both countries have introduced various climate policies, the role of taxation in fostering circular economy practices remains underexplored. Through a comparative analysis, the study examines how current tax frameworks in each country support or hinder the transition to a circular economy, identifying key barriers and missed opportunities. It assesses the extent to which fiscal policies incentivise or disincentivise circular practices such as resource efficiency, waste reduction, and low-carbon innovation. The findings highlight structural gaps and areas for reform, culminating in targeted policy recommendations to better integrate circular economy principles into tax systems. This research contributes to the growing discourse on aligning tax instruments with circular economy goals, offering practical insights for policymakers seeking to accelerate circular and low-carbon transitions.