In the end, the poor pay more, in comparison, than the rich. The rich and corporation will more benefit in VAT or GST system. Because they can avoid to pay the income tax after VAT or GST is applied. Unfortunately, the poor who has low income is going to pay the goods and services with higher price after VAT or GST applied.
* A Malaysia minister said, below RM2,000 salary is considered as poor.
GST is mostly known as VAT (Value Added Tax) in countries that apply the system. Countries that use the term GST include Australia, New Zealand, Singapore, Canada and now, Malaysia.
VAT/GST was introduced in France in 1954 by Maurice Lauré, to replace a system which relied a highly distortionary turnover tax on sales to supplement a rather ineffectual income tax system.
Today 138 countries utilise Value Added Taxes (VAT) whilst a number of countries - notably the US, operate sales taxes, usually single-stage taxes at retail. In almost all countries these taxes are either the largest or second largest source of tax revenues.