SST vs GST - Which is Better?

On the 1st of June of 2018, the GST, so-called the Goods and Service Tax is officially announced by the Malaysian Government to be replaced by the new SST (Sales and Service Tax) due to the impacts it brought to the country’s economy. Both are taxes, but why GST is said to be overburdened but instead the SST is said to be people-friendly?

Differences Between SST and GST

In contrast with the SST, GST is a multi-level tax structure. Manufacturers, distributors, retailers, and consumers are all subject to the GST, and it applies to a wide range of targets, including producers selling items to dealers, merchants retailing them to consumers, and so on. 

Almost all enterprises, merchants, and trades are subject to the GST. Only manufacturers are subject to the sales tax, whereas some regulated services, such as professional services, are subject to the service tax. Suppliers are permitted to claim back the government's GST, however, the government does not instantly reimburse GST claims, causing cash flow issues for businesses.

On the other hand, while the SST is being a single level tax, only the service industry and manufacturers are required to pay it when selling goods to dealers. In comparison to GST, which includes many phases, SST just has one.