As the only country that reverted from the Goods and Services Tax (GST) to the Sales and Services Tax (SST), Malaysia is circling around a strong rumor that the GST may be re-introduced to the country. Nonetheless, both SST and GST are deemed regressive since they can affect the household consumption expenditures of certain income groups, especially the lower-income group, which may be imposed with a heavier burden than the higher-income group. Hence, this study aims to gain the perceptions of the lower income group to assess their acceptance level towards SST 2.0. In addition, using a quadrant analysis, the study also evaluates what is still lacking in the Malaysian indirect tax system, which requires urgent attention from policymakers. Data were gathered using questionnaires disseminated to the lower income group or Bottom 40 with a household income below RM4,849 and the samples were selected using purposive sampling. A total of 236 usable questionnaires were collected and the quadrant analysis was employed to analyze the data. Overall, the results showed that Malaysia’s indirect tax system is still lacking in terms of public trust in the government, certainty, simplicity, appropriate government revenue, and the effectiveness of tax administration. Drawing from the findings of this study, policymakers can continuously mitigate the public burden by exempting or including more necessities

(food) from the consumption tax, and the public should embrace the consumption tax if this could reduce their financial burden in the long run. In addition, it is important that the taxpayers feel assured that the taxes they pay using their hard-earned money are well managed in order to provide quality services to all citizens of Malaysia, especially during uncertain times due to the COVID-19 pandemic and other crises. Tax administrators could also develop adequate approaches to elicit a high public acceptance

level by comprehending the good tax policy-public behavior association. In essence, the current study has significantly expanded the body of knowledge on indirect tax acceptance with novel techniques in the methodology section and additional insights into the factors impacting tax acceptance, particularly in indirect taxation.

Highlights

• This paper is devoted to studying the indirect tax system in Malaysia which is Sales and Services Tax (SST) from perspectives of the lower income group in Malaysia regarding on their opinion. In the course of the study, the factor such as the equity and fairness, neutrality, certainty, simplicity, effectiveness of tax administration, transparency and visibility, trust and tax knowledge will be examined.