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The Effect of Goods and Services Tax (GST) To Inflation Rates in Malaysia
Alsabrin bin Hashim
Supervisor: Dr Nizam bin Ahmat
Bachelor of Economics (Natural Resources)
School of Social and Economic Development
The purpose of this study is to investigate the relationship between Goods and
Services Tax and inflation rates in Malaysia. Goods and Services Tax is a value added
tax implemented in Malaysia on 1 April 2015 with 6% standard rate. There are two
main objectives in this study, they are to identify the GST effect to inflation rate in
Malaysia and to compare GST and Sales and Services Tax (SST) effects to the inflation
rates in Malaysia before and after GST implementation. The data was analyzed by
using Ordinary Least Square (OLS) and White-Huber standard error to test the
robustness standard error. The result has shown that the inflation rates was highly
influenced by the GST in Malaysia from April 2015 to December 2017. This is clearly
proven through the results of the study where an increase of one GST will increase
4.75 inflation rates in Malaysia. This study suggests that Malaysian government needs
to take the best initiative to mitigate the significant impact of this GST implementation
on the inflation rates.
1477 | UMT UNDERGRADUATE RESEARCH DAY 2018