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mented on the importance of taxpayers being adequately informed to avoid unwarranted discrepancies in implementing GST and to also avoid increases in price levels. The lack of tax knowledge is closely related to the demography of Australia's aborigines because a large percentage of Malaysian states are based on 'remote communities that are usually deficient in clerical, accounting and managerial skills; so any increased burden in this area will create difficulties' (Stanley, 2002). It will be interesting to identify what methods the government will employ to overcome this problem.

The Government has proposed that GST compliance will be applicable to businesses that achieve an annual sales turnover of between RM100,000 to RM300, 000 or more and will be imposed on all supplies of goods and services at every stage of the supply chain (Chew & Tan, 2009). This means that all businesses that supply taxable goods and services will have to charge GST. This is offset by the GST paid on purchases where the net amount will have to be remitted to the Royal Malaysian Customs. Business will then be required to obtain and keep tax invoices from suppliers if they are to reclaim the GST paid. Besides the point of non-compliance, another major problem is majority of businesses will struggle to keep track and report these invoices due to a lack of technology and training. This was pointed out by Patterson (1990) who found that regardless of governments' intentions to simplify GST; it did not aid businesses with its execution. This will inevitably cause further compliance issues as businesses will be inept in keeping accurate records and reporting its revenues appropriately.

Another important factor the Government must consider is the possibility of price rises which can adversely impact on the lives of Malaysian Citizens. However, it has been pointed out that the increase in price may initially be due to the transitional phase of GST. Singh (2007) has observed that with the introduction of GST, it can result in a one-time increase in the cost of living. Moreover, James and Zheshi (2004) witnessed how the introduction of GST in China in 1994 did not cause an increase in the rate of inflation. This is also aided by the promise by the Malaysian Prime Minister that there will be no rise in inflation. However, Dewan et al. (2003) found that an increase in GST resulted in a direct increase in inflation. This brings into question whether the implementation of GST will do more harm than good to the welfare of Malaysian Citizens. Therefore it is important to identify whether the implementation will either cause a one-time increase in price or a continuous increase in the average of price over the time.

Hypothesis/ Research question
Hypothesis:
1.3 Objectives of Study
With the introduction of GST, how would this effect inflation?

There is a growing concern that the introduction of GST could increase inflation as the passing of the cost will inevitably end up with the consumer.

What measures have been taken in order to ensure that compliance, effective audit and strict application of penalties can be enforced?

The Government must have the necessary controls for risk management in place in order for the transition to GST to be successful.

Is there a suitable model that can be adopted from a country with the same economic structure that has