e-ISSN: 2289-6589 Volume 6 Issue 1 2017, 116-126 e-Academia Journal (http://journale-academiauitmt.edu.my/) © Universiti Teknologi MARA Terengganu 116 THE EFFECTS OF GST KNOWLEDGE TOWARDS STUDENTS’ SPENDING PATTERN * Nurul Mardhiah Harun 1 , Nadiah Abd Hamid 2 , Mastora Yahya 3 , Bedah Ahmad 4 , Muhamad Irsaffuddin Ismail 5 1,2,4,5 UiTM Puncak Alam, Selangor, Malaysia 3 Kolej Poly-Tech MARA, Kuala Lumpur *Corresponding author’s email: nadiah201@salam.uitm.edu.my Submission date: 26 February 2017 Accepted date: 10 April 2017 Published date:15 May 2017 Abstract The implementation of GST in Malaysia as of 1st April 2015, which replaced the current Sales and Services Tax (SST) is viewed as a more efficient tax to manage and is able to generate greater revenue collection for the government. This multi-tiered tax rate of 6 percent is finally borne by the end consumers of the goods and services regardless of their income levels. As a result, even non-income earners such as students are inevitably forced to bear the rising price of their consumptions. This study aimed to investigate the level of GST knowledge among the final year students in the Faculty of Accountancy, UiTM Puncak Alam. The students’ knowledge and perception on issues related to GST were found to have certain impacts on their spending pattern. Evidently, the findings revealed that students who have much information about GST and in cases where they perceived that GST is an unfair and unequitable tax system, both situations are highly likely to have significant effects on their spending trend. Keywords: GST; students’ knowledge; spending pattern; equitable; tax system 1.0 INTRODUCTION In Malaysia, the intention to introduce Goods and Services Tax (GST) was mooted since Budget 2005 when the government first announced that GST would be replacing Sales and Services Tax (SST). However, on 22 February 2006, the implementation of this proposed tax was postponed to give sufficient time for traders to prepare their business for the implementation of the new tax, adopt suitable software for the business and provide adequate training to staff involved in GST transactions. Finally, on 1 st April 2015, GST was fully implemented by the Malaysian government (Royal Malaysian Custom Department, 2015), with the aim to reduce the continuous budget deficit and to prepare the nation in times of economic uncertainty. The newly implemented GST is not completely free from any problems and past literature have discussed several issues and problems related to GST implementation (Kadir, Yusor & Hassan, 2015; Shaari, Ali & Ismail, 2015; Palil & Ibrahim, 2011; Csontos, Kornai & Torth, 1998). Currently, the escalating inflationary pressure in Malaysia is believed by many people as a result of the recent cutback of petrol subsidies (Ling et al., 2016). The relatively high cost of living particularly in big cities like Kuala Lumpur, Penang and Johor Bahru has persistently stimulated inflation and consequently, the significant general price increased due to GST has further worsen the situation (Palil & Ibrahim, 2011). As a result of the increase in prices of several products in the market, the situation has affected the consumers’