reformation for modern taxation regimes

Comment in The Economist somewhere. Apr 27th 2010, 01:59

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Dear Sir,

GDP would seem to be more of an Accounting tool, thus adding to it may be an improvement. Certainly, externalities have been ignored for far too long. This 'negative' number is something worth investigating, if our aim is the betterment of our condition.

However, to improve our Standard of Living, our perception of the tax system must change so that it acts as a behavioural tool. Something in its payment must reflect the costs we pay as Communities. If as consumers we knew what our usage of a thing really cost (its externalities included), given what we pay as a society for having this choice available (pollution, health, safety), would we choose the product which may have the same total price to us, but less tax inherant.

Curious to think that the GDP could remain unchanged, while we make wiser choices as individuals. Using General System Theory as we do, I see nothing onerous about a tax system where Income Tax is basically Flat (7-14%), the cost of our Good Governance (based on the Principal of one man one vote, and its low cost it will not be evaded); and where the VAT collected is an indirect tax infinitely variable at all levels of production so that total cost includes the second sum indicated, the tax inherant. (thus a better refrigerator can be built being greener, which may cost more to manufacture, but to the consumer neutral in terms of total price). More of some private good, will have been made, but less Tax will have to be spent on its 'social cost'; a GDP cannot motivate social behaviour, a tax system based on the Principal of a Consumer paying for what they get will.