1. Introduction

Good and services tax (GST) has been launched for few months and all the taxation has changed. After it launched, it has affected too many of the consumers where some of them think that launching of GST is not a better solution to increase the economic growth. Besides that, some of the consumers consider the launching of GST as a result to increase the economic growth. Yet, it also might cause a perception on some consumers that launching of GST will lead to increase or decrease of the goods to them. Therefore, there are many effects that cause the consumers on this GST on a long term of economic growth.

Furthermore, launching of GST should have some of the reason that the government needed to launch it. Factors of launching GST is not a small matter to think of by the government as the implementation of GST could affect most of the consumers and the business people. This is because the types of tax systems that runs by GST probably gives advantages to certain areas but also giving disadvantages to certain areas which will burden them.

2. Effects of Goods and Services Tax (GST) on Economic.

The implementation of GST will cause the economics to become better and will grow more than before implementing GST. This is because before implementation of GST, Malaysia is using a system called as Sales and Service Tax (SST) which are not able to maintain and improve the economic condition. Growing on economics provides better incomes to the Malaysians which able for them to live in a more wealthy lifestyle. Therefore, GST provides most of the best matters to the consumers and business people such as cost of goods will be lowered down.

2.1 Taxation Structure

After GST has been implemented in Malaysia, it has causes the taxation structure in becoming more effective and efficient. With the new system of taxation from GST, it causes its system to become simpler and transparent. According to NBC GST (2015), GST tax system is a more comprehensive, effective, transparent, and business friendly tax system.

2.1.1 Standard-Rated GST

In GST taxation structure, it is divided into three types which bring benefits to the consumers where the cost of the goods has already lowered down. First and foremost, the standard- rated GST will be charging a tax rate of about 6% to every supply chain. Through this taxation system, everything that is bought will be recorded in a receipt and will then pay back to the government. According to Sharen (2014), the tax will be billed and collected by businesses and paid to the government. As refer to figure 2.1 (a), all the parties except the final consumers can claim back all the credits on GST as they have already paid which is known as input tax. There is a view that input tax refers to the GST paid by businesses on the purchase of goods and services used to perform their businesses (Shamasundari, 2015). Habib (2015) summarizes the benefits of standard-rated GST on certain items, stating that:

‘The cost of television sets, refrigerators, air conditioners, electric irons, hair dryers, diapers and soft drinks are expected to come down with the introduction of the Goods and Services Tax (GST). These goods have a 10% sales and services tax embedded in their prices, but with the GST replacing the SST in April, the lower 6% GST rate will make them cheaper’.