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ect the government's monetary reserves and the government will need to seek new revenue sources (Brook, 2004). Malaysia must lower its dependency on petroleum and petroleum related products as a source of its revenues. That is why a reduction in non-productive raising revenues and restructuring subsidies expenditures have been requested in order to tap into new and reliable sources of revenue (Narayanan, 2007). It is believed that the proposed introduction of the Goods and Services Tax (GST) will achieve this.

Therefore, this first chapter will consist of the motivations behind this piece of research, and the considerations needed for a reform program on the nation's tax system. This will thus lead on to the overall hypothesis of the research.

Motivation for the selection of research topic
Each country employs its own tax policies as a method of generating revenue as without it, countries would struggle to stimulate growth for further development. One aspect of tax, indirect tax has interested me the most, more specifically; Value-added Tax (VAT). VAT is unlike any other tax as the cost is borne by the consumer. So in theory, this form of taxation will not impact on the economy as importers and exporters will remain largely unaffected because the costs are passed down to the consumer. . Furthermore, VAT is considered a repressive tax because the more a consumer spends, the more VAT they will have to pay. This makes it an invaluable instrument in generating revenue quickly. It has been well known that the International Monetary Fund (IMF) and the World Bank view Malaysia's narrow tax base economy as unviable (Hamdan, 2010). Malaysia has been mainly focused on generating revenue from its natural resources and has always imposed low tax rates. In the 2007 budget proposal, the Prime Minister YAB Datuk Seri Abdullah Haju Ahmad Badawi announced plans for implementing VAT. This motivated me to research the various issues a developing nation such as Malaysia would experience when trying to implement VAT and how the Malaysian people would take towards this form of taxation.

According to the proposal, GST will only be applicable to businesses that generate sales of RM300, 000 and more. However, as GST will be passed right down to the consumer, the focus of this study will be conducted on how GST impacts on the ordinary Malaysian Citizen right up to the small and medium sized businesses. The reason for this is to obtain a thorough understanding of the overall impact the implementation GST will have across the country.

Considerations required for a reform program: Implementing GST
'GST has, in recent decades, become the most important single tax in most developing and transitional economies' (Richard M. Bird, 2005). The evidence can be witnessed by the number of countries in recent years who have attempted to implement this, namely Taiwan and Pakistan. More importantly, it was noted by Victor Thuronyi (2003), 'while there are differences in VAT from one country to another, compared with the income tax, VAT laws are remarkably similar.' This supports the intentions of developing nations such as Malaysia who are still in the process of implementing VAT. However, one of the major hurdles faced by these developing economies was raised by Richard M. Bird (2005). He argues that 'developing countries encounter various problems in the introduction process, caused by the lack of self-as