Types of Consumption
Consumption can be classified in various ways; however, for the purpose of this discussion, let’s classify goods/services in the following categories:
• Basic Essentials
• Luxuries accessible to few
• Cultural goods
• Goods with particularly large negative externalities
• Everything else
We define Basic Essentials as goods necessary for basic human survival, which are required in specific, measured amounts.
These include food, water, and shelter. Luxury goods would include those that are only consumed by the top tier of income earners, such as high-end jewellery. Importing these luxuries drains foreign currency reserves at the expense of importing capital equipment. Goods with particularly large externalities include tobacco, recreational drugs, simple sugars, fuels, and aerosols. Cultural goods include local handicrafts, cottage industry, art, and performances of local/national cultural significance. All other goods and services would occupy the middle ground. With this in mind, a progressive and sustainable VAT, an SVAT, can emerge to fund the remainder of government that the Unified Location Tax does not.The costs of Basic Essentials must be kept to a minimum to maximize real incomes; not only with regards to the SVAT program, but by keeping supply high, supply chains fluid and without interruption, infrastructure adequate, competition intense, and ample transport options for products to get to market. With regards to the SVAT, this means a zero-rate on essential goods. For the New Physiocrats, this is limited to fresh ingredients and specific prepared food, housing, water, and culturally significant clothing. Specific details will be discussed in the following section.
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