For all our lives we have been misled about our economy and taxes and how it all works. We have political systems that have grown out of beliefs that have little substance. Let us examine the facts and sort out the true from the false.

EXAMPLE
We pay our taxes when we pay our income tax. TRUE OR FALSE.           FALSE
We have been subjected to income tax for hundreds of years. We have been told that this is the way to pay our taxes and there have been elaborate systems developed to calculate what we should pay. Everything tells us that we pay tax on our income. We have other deductions taken from us on the basis that we pay a proportion and the employer pays a proportion and it is all rubbish.
Here is why:

We are paid per month say

Gross pay  1000
Less Social Services  -20
Less Medical/Manpower services ect -25
Less PAYE -250
  295
NET PAY 705
   
In addition the employer may pay additional Social services etc 55
The total cost to the employer is then 1055
And the employee receives 705

The employer then charges into his costs the full price of the employee being 1055 so the cost of the employee to the business is 1055. In addition the employee may well pay rates on his house, TV licence, road tax, toll fees etc. etc. In addition the employee is paying VAT on everything he buys but we will exclude this at this time.

Now ask yourself who is paying all these taxes, is it the employee or the employer?  End answer is the employer and the employer recovers all of these taxes from the prices he charges for his products. The employer could just as easily pay the employee his net pay or even less and pay all of the taxes. The cost would be the same. Of Note is that all of the taxes paid by the community are built into (a) government costs or (b) business costs.

OTHER TAXES
Now the remainder of the taxes raised by governments are against businesses ,  as tax on profits, rates and taxes on properties, licences etc. and the businesses build these taxes into the prices they charge for their products.

RESULT All taxes are in the price of the goods produced by the business sector.

HOW DOES THE ECONOMY WORK : IT REALLY ONLY WORKS ONE WAY

A country comprises three sectors, a community of people, a government and a business sector. The government provides the leadership for the country making such rules and regulations as they deem necessary. The business sector makes products or provides services for the community, other businesses and the government.  The products and services for government will be included in the taxes that they raise. The products and services to other businesses will be absorbed into the business sector.

LITTLE RECOGNISED FACT
The end product of the business sector is the provision of goods and services to the community. The community buy and consume the end products of the business sector and there is nothing else. It is easier to realise this in a self sufficient country economy but it is true on a Global basis.

THE END PRODUCT OF ALL BUSINESS IS THE SUPPLY OF GOODS AND SERVICES TO CONSUMERS WHEREEVER THEY MAY BE. The strength of the economy will therefore be governed by the average standard of living of the community which will generate the volumes of production required.

FINAL DEDUCTION
Because the business sector absorbs all of the taxes and the end product of the business sector is the provision of goods and services to the community it follows that the community is paying all of the taxes when they buy the goods and services.
Because there is and can only be one taxpayer it follows that the tax systems can be changed into a basically single system of VAT.  In changing the tax system around we can achieve a 20-30% saving in production costs and a further 20-30% saving in government expenditure, a far better achievement than austerity.
Of Note : Goods produced and consumed in the same country will produce the most tax revenue to government. Imported goods will produce less and goods produced for export will produce less. It is however anticipated that trading partners may well add VAT to exports.  

NOW LOOK AT GDP (GROSS DOMESTIC PRODUCT) : IS THIS THE CORRECT MEASURE OF PERFORMANCE
This is used as a measure of the strength of the economy but is this correct? It is a measure of the productivity of the country but this can be increased with technology. If what I have said is true then GDP should grow with the growth in population combined with any improvement in the standard of living because as we have seen it should be related to the spending power in the country.
In using just GDP as a measure there is liable to be confusion and it is necessary to have a correlation between GDP and spending power. All countries should balance these issues in order to balance their books. Countries must balance their imports with exports.
It will probably be found that China exports more than it imports because its wages and internal spending power is low but the world economies cannot exist on this basis. At this point in time China and others are reliant on the spending power in Western countries and have low production costs and low spending power in order to compete. Western countries have developed unemployment benefits which compensate for the drop in spending power when people become unemployed. This adds to the amount of tax that needs to be raised and the cost of goods produced.
Taken to its end conclusion the economy should become as self sufficient as possible. In any event it must produce sufficient exports to cover imports and generate sufficient work for everyone to earn an income, even to the point of reducing the average hours of work.
At some time in the future there will be a need for governments to control population growth. China had a restriction of 1 child per family which has now been changed to 2 children. Other countries may well need to follow suit.

ANOTHER TAX ISSUE
Why do we give a tax allowance to Business for machines that will replace workers in the knowledge that spending power in the market place will be reduced by those workers incomes and the tax revenue to government will decrease while the cost of unemployment benefits will increase. Should they pay more tax instead of less?
Businesses pay tax on their profit and make more profit to pay the tax. They could reduce their costs and make the same profit if the tax was removed altogether. After all we have already shown that this as well as all the other taxes are in the price paid by the consumers.
Governments have looked for all sorts of excuses (reasons) to impose taxes without resolving the basics.

POLITICS
We have grown up with Capitalism, Socialism, Communism and liberalism where Capitalism looks after the business sector, Socialists look after the community and the Communists envisage running businesses other than for profit and money. It matters not, if the above analysis is correct then it is as vital to look after the community as the business sector and technical advances should benefit everyone and not be just for profit. Money is needed in the economy to ensure freedom of choice for the people and Capital development for business.
 Look at the Centreline System of Government which is based on a VAT system of taxation which provides savings in production costs of some 20-30% with an additional saving in government expenses of another 20-30%. It ensures that Imported products will share the tax burden with local products. It lowers the cost of employment and in the interests of keeping employment costs down it has free education and health services. It recommends that countries  run on a surplus and not on loans, it will attract its own investments but governments must balance their books. It is based on economics and not politics. This is when Capitalists become socialists and socialists appreciate capitalists in the interests of economic development.