Objective - Since the 70s, the Malaysian government has been focusing on sustainable development to improve society's economic well-being. In September 2015, Malaysia reaffirmed this commitment with the other United Nations countries by putting the 2030 Agenda for 17 Sustainable Development Goals (SDGs) into action and focusing on the bottom 40% households (B40). Unfortunately, the implementation of Goods and Services Tax (GST) on 1 April 2015 and followed by the Sales and Services Tax (SST) 2.0 on 1 September 2018 has impacted all income groups, especially the B40, with a claim that indirect tax is regressive and burdensome (MIER, 2018). Hence, the present study aims to analyse SST 2.0 tax burden using the elements of the guiding principles of good tax policy.

Methodology/Technique - In this quantitative study, the researchers distributed questionnaires to the B40, M40, and T20 groups throughout Malaysia. Evidently, the government should consider reducing the SST 2.0 tax rate to minimise the tax burden of all groups of income earners based on the ability to pay.

Findings - Furthermore, the efficiency of tax administrations is vital to strengthen the enforcement function in controlling the prices of goods and services. The findings can provide useful feedback to policymakers and tax authorities in designing a progressive indirect tax.

Novelty - The policymakers should also consider the new SST model and propose relevant social safety net programmes to enhance economic well-being and eradicate inequity.

Type of Paper - Empirical.

Keywords: SST 2.0; GST; Tax Burden; B40; Guiding Principles of Good Tax Policy.

JEL Classification: H31.

URI: http://gatrenterprise.com/GATRJournals/AFR/vol6.3_5.html

DOI: https://doi.org/10.35609/afr.2021.6.3(5)

Pages 167 – 177