Graduated Product Tax

Technology permits us to extend this social and ethical element of taxation right down to individual products.

Start off with the default average of 17.5% and then consider each product. Take for example toilet tissue. Some is recycled, some isn't. Increase the VAT on the unrecycled, and reduce it on the recycled. The ultimate receipts are the same, and there is a level playing field for all manufacturers of the product (imported, home-produced). The extra you pay for the unrecycled, reflects the harm your choice does to the environment, and the extra resources the product requires for production.

Now go further. Look to the behaviour of the company: does it employ local people or outsource to a distant country. Does it have a good environmental record and good employee relations. Have there been a lot of workplace accidents? It is possible then to alter the level of taxation on the company's products, all of them, in accordance with such criteria. A company that behaves badly (socially, environmentally, ethically) will have a higher rate of VAT slapped on all of its products. A well behaved company run on good ethical lines, will have the VAT on its products reduced. The total income from this new graduated product tax will be the same as it would have been under a flat-rate VAT system, but government gets to influence the ethics of the business world, and counteract the amorality of the free-market and the damage caused by unrestricted globalism.

Businesses can still make as much money, but they have to be more competent in their operations: they will still be operating on a level playing field with all of their competitors on a direct product-for-product basis. Any new product in an area with GPT, will be rapidly judged against the same criteria as extant products, and given a specific rating as it comes to market, as part of the normal product development cycle.

Undercutting home-produced products by importing products from distant countries, produced by children in sweat-shops, paid peanuts, and treated as virtual slaves by companies who simply dump their waste wherever they can, will no longer be an option.

GPT would extend further than VAT. Processed foods (high in salt, sugar, and fat) would automatically qualify for a higher GPT than unprocessed foods. A negative tax (effectively a subsidy) may then be levied on healthy, unprocessed foods (ie. fruit and vegetables), with a dramatic reduction in the cost of organically grown, home-produced, and ethically reared foods. Food sold by farmers to supermarket chains would be GPT rated to reflect the fairness of the price paid by the supermarkets. A heavy GPT surcharge would prevent the supermarkets forcing farmers to sell food for less than the price it cost to produce it, merely because they control the market.

A GPT levied on a make of car would consider fuel efficiency, quality of manufacture, methods of manufacture, safety, environmental issues, and employee relations. A GPT on any computer component would consider the expected lifecycle of that component, and the effect upon the environment of products designed to have a short life before they are replaced by an upgrade (ie. processors, versions of Windows). Air-tickets would qualify for a high GPT given the pollution produced by air travel. The GPT on any product containing tobacco or any GM contaminant would be the highest rated of all. Medicines would be zero-rated. GPT could extend to the service industry.

This will not affect the ability of companies to make money, but will alter the rules by which they make it. The job of a company is to make money. The job of a government is to regulate society for the better. A GPT is perhaps the most effective, and lowest cost mechanism for doing the latter, by applying gentle regulatory pressure to the former.