Many argue that it will lead to higher cost of living as firms will pass on the tax burden to consumer and may in fact take th opportunity to increase prices to cover other rising cost of production. However, we must recognise the facts that the new GST will replace the original 10% sales tax which is higher than the 6% GST! Given that most household items are exempted from the GST, the impacts on the lower income Malaysian might not be as great as it seems. Thus to be fair to the Malaysian government, the new tax might act as a redistribution policy to transfer the wealth from the richer to the poorer.
The other interesting aspect would be how Singaporean will be reacting to the GST hike? Will Singaporean stop going to Malaysia for their shopping? Most Singaporean interviewed said that they would still go to Malaysia as the prices after GST will still be cheaper as compared to Singapore. The stronger Singapore dollars against the Malaysia Ringgit also contributed to the increasing demand for Singaporean in Malaysia.
So be prepared to pay more in Malaysia during your next trip!