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Indirect Taxes and Fiscal Sustainability: A Conceptual Revisit of SST and GST in Malaysia

Author

Listed:
  • Siti Nur’amalina Syeddin

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

  • Noormahayu Mohd Nasir

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

  • Nor Zarina Mohd Salim

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

  • Zarul Azhar Nasir

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

  • Muhammad Adidinizar Zia Ahmad Kusairee

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

  • Hafini Suhana Ithnin

    (Faculty of Business and Management, Universiti Teknologi MARA Perak Branch, Malaysia)

Abstract

This paper conceptualizes the role of indirect taxation in Malaysia by comparing the Goods and Services Tax (GST) and the Sales and Services Tax (SST) within a theoretical and policy framework. Drawing on the principles of taxation, optimal tax theory, and political economy, the study develops a conceptual framework that highlights the interplay between administrative complexity, economic efficiency, revenue generation, and social acceptance. While GST is recognized for its broader base and revenue stability, SST is viewed as simpler and more publicly acceptable, though less efficient in reducing tax distortions. The framework emphasizes the dual perspective of demand and supply, showing how tax design affects both consumer welfare and business competitiveness. Conceptual gaps remain in assessing long-term welfare impacts, comparative regional experiences, and the integration of quantitative and qualitative evidence. Policy implications suggest the need for stable, transparent, and socially responsive tax regimes that balance fiscal sustainability with equity and legitimacy. The study contributes to advancing the discourse on indirect taxation in Malaysia and provides a foundation for future empirical research.

Suggested Citation

  • Siti Nur’amalina Syeddin & Noormahayu Mohd Nasir & Nor Zarina Mohd Salim & Zarul Azhar Nasir & Muhammad Adidinizar Zia Ahmad Kusairee & Hafini Suhana Ithnin, 2025. "Indirect Taxes and Fiscal Sustainability: A Conceptual Revisit of SST and GST in Malaysia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 5929-5936, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:5929-5936
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    References listed on IDEAS

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