A VAT taxes consumption, not lowering cost of production. If I am reading this right, what the EU are considering seems like a new type of tax, a tax on improve

A VAT taxes consumption, not lowering cost of production. If I am reading this right, what the EU are considering seems like a new type of tax, a tax on improvements in production efficiency (specifically, lowering labour input). Note that this is also different than company tax. When goods become cheaper to make through automation yes, some or all of that might turn up as profit. But it also might result in lower prices being passed on to customers and a more competitive company. Company tax wouldn't capture this. For industries which are almost fully automated already (e.g. textile manufacturing) it does not seem there would be much impact. But it would (from my point of view, arbitrarily) punish new types of automation introduced after such a tax were applied.