GST

Morning peeps !

Overall, this article tells about type of tax for GST and how GST might be a high or low burden to different types of consumers. 

In general, GST is a value added tax in Malaysia which is also a general type of consumption tax. It is levied on most transactions of production process. The first question consumer might want to ask is whether GST is regressive or progressive tax. The answer to this question will determine the low or high burden that the consumers need to carry.

A progressive tax is a tax in which the tax rate increases as the taxable amount increases. This simply means that the higher the income, the higher the tax rate that one needs to pay, and vice versa.

On the other hand, regressive tax refers to a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. In this case, the higher income will help to lower one's burden in paying the tax.

So here, we can see that GST concept is related to regressive tax where both rich and poor people needs to pay the same tax rate regardless of the amount of their income. 

For instance, necessity goods are required by both rich and poor people. As this goods is inelastic whic is less than 1, the consumers need to pay more amount of tax compared to producers. 

However, different consumers would have different income where the high income consumers would not feel the burden to pay GST as much as low income consumers. This is because they have higher balance of income after paying GST. As a result, the low income consumer would need to purchase less necessity goods to ensure that there are more balance of income to spend on other requirement/liability.


P/S : Go to this link to read full article.