You would pay 66% VAT on repairs as well.
One of the most reasonable proposals for UBI is to finance it through VAT. Some 15 years ago there was a party in Belgium that lobbied for UBI and they calculated that VAT should increase from 21% to 33% to finance UBI.
Edit: I guess that if you're paying a salary to someone in your household staff who can repare the smartphone you only need to buy (and pay VAT on) the replacement glass. But I don't think this is what you meant. I think that you just don't understand how VAT works. If you bring your phone to a repair shop in Belgium the 21% VAT will be applied on the whole bill, parts and labour.
In a country with 21% VAT, the supplier will be paid 60,50€, and the end client will have to pay 121€ for the repair.
The repair shop now owes 21 - 10,50 = 10,50€ in VAT to the tax authorities.
But the repair shop still has 50€!
Assuming we are in Belgium and all of the benefit is used to pay the salary, we will deduce 22% social security tax, then the repairer will have to pay his 50% income tax, so at the end the repairer receives around 20€ in net pay.
I am simplifying to the extreme in the hope that you get the idea.
You may be tempted to say that the end client paid 121€ from his salary, and 21€ is actually the tax. But this is the whole point! He will be more likely to pay 21€ VAT on the repair rather than 120€ VAT on a new iPhone. And repair shops there will be.
If
a) the customer pays 100+tax for the repair (which includes in this very simplified model 50+tax for the supplies and 50+tax for the value added by the repair shop)
and
b) the tax goes from 21% to 66%
then
c) the customer will pay 166 for the repair instead of 121.
That's what I said in https://news.ycombinator.com/item?id=26967392
I don't see how "work will be relatively cheaper". The VAT applies to everything.
(It's also confusing that you say that the benefit is used to pay the salaries, by the way. And if what you call "benefit" is used entirely to pay the salary then no corporate tax will be paid because the company will be losing money.)
Still, work will be cheaper compared to the price of products.
In my example, the 50€ will be used to pay the salary, and the net salary will still be 20€ while the price of the phone will increase by 21%.
Of course if the price of the new phone before tax is higher than the price of the repair before tax the same will be true after tax.
And if the price of the phone is 200 and the price of the repair is half of that it will still be half of the price of the phone after tax. But if taxes are 0% it's either 200 or 100 for the repair and if taxes are 900% it's either 2000 or 1000 for the repair. The repair may be prefered if you cannot afford the difference but it will still be half the price of the new phone.