In the current system the government can use tax incentives to encourage businesses to pursue policies which are in the national interest. Would the restructuring of the tax system remove the ability of the government to do this?
No, because in the same way that current taxes vary on different goods, VAT would also not be one blanket tax. The government could retain its ability to provide incentives and hold power over companies by varying the level of VAT on different goods. This would also make the tax system more transparent and more difficult to abuse.