THE IMPACT OF THE GOODS AND SERVICES TAX (GST) IN MALAYSIA: LESSONS FROM EXPERIENCES ELSEWHERE (A NOTE)

The recent Malaysian attempt to introduce the Goods and Services Tax (GST) was thwarted by public concerns about: (i) its impact on the price level; (ii) its regressivity; (iii) the possibility of the rate increases once the tax is in place; and finally, the disincentive large revenues from the GST would be in addressing the underlying causes of wasteful public expenditures and leakages. The experiences of countries that have implemented a similar tax are surveyed to assess these concerns. It is concluded that within the Malaysian context, all the concerns are well-founded and measures are therefore suggested to ameliorate them.