External economic factors and Malaysia’s domestic fiscal position dictate that the Goods and Services Tax (GST) is likely to be introduced in the upcoming Budget 2014. In this paper, we: 1) assess if GST is a progressive or regressive tax; 2) study the impact of GST on Malaysian households; 3) estimate the total GST raised from households in perfect condition vs. practical circumstance; 4) estimate the expected inflation spike based on the Consumer Price Index; and 5) discuss the wider implications of implementing GST. Despite setting essential items like basic food, public transportation, education and healthcare as exempt or zero rated items, we show that GST is a regressive tax. Using 7% as the standard GST rate, the average household is expected to pay 2.93% of monthly income as GST (RM 104 per month in July 2013 values). Households will pay higher percentage of their income as GST if they are: middle and low income groups (with those earning around RM 2,500 per month paying 3.07%), engaged as technicians, clerical and services workers, farmers and fishermen, in single person household, in young households (less than 24 years old), Bumiputera-led households and households residing in Peninsular Malaysia. We find that it is not possible to make GST a progressive tax as long as we want to raise the same amount of revenue. We experimented with: 1) a multi-tiered GST system whereby certain items attract higher GST rate than the standard rate; and 2) imposing high GST rate on fewer items, whilst exempting or zero-rating all remaining items. The high GST rate can be levied on transport excluding public transportation (since higher income groups spend more on transport as a proportion of their income) and restaurants and hotels (since they cannot be easily substituted). Both of methods cannot make the highest income household pay a higher tax burden than the middle income household. Indeed, given that a multi-tiered system is complicated to administer, it is not recommended for Malaysia at this stage. The second method, when combined with tax rate reduction for the middle income groups (annual income between RM 30,000 to RM 100,000), might address the regressiveness of GST. Ignoring secondary effects, inflation is expected to spike up by an additional 3.86% and domestic consumption will be negatively affected as households’ spending power is reduced. GST is expected to raise RM 7.5 billion (in July 2013 values) annually from households in perfect conditions but lesser since tax collection is imperfect.