In this generation of magnificent technological developments and innovation, the role of machines cannot be denied. However, as companies begin to replace the human workforce with machines, it also enables the government to lose their authority to tax workers resulting in tremendous suspension or loss of tax revenues each year. So, the new argument entails imposing taxation on robots considering them as human employees.
What is a robot tax?
The concept is that companies who are replacing human employees with machines or robots should also pay taxes. The robot taxation amount can then be used in order areas of the displaced workforce. The concept can be such that the company pays tax on each such machine in the same way as in the case of a human employee. The alternative can be companies paying higher corporation tax rates to retain the balance.
Countries with Robot Tax
If robot tax is to be considered, South Korea is the only country to impose that currently. However, the wave is beginning to hit other countries as well such as the UK, Canada, U.S.A, and Japan. There are still a lot of debates going on across governments and parties. There are also many other key things to consider. South Korea introduced the first robot tax on August 6, 2017.
Benefits
The future may see a high generation of taxable profit which in turn is advantageous to humans. Apart from monetary benefits, it can also provide a solution to workers’ displacement.
Economic Benefits
Automation threatens human jobs. Employment generates incredible amounts of income tax. So, automation means more productivity, and hence, more profit. So, one of the main ways to recoup profits is to impose taxation on robots. This will also call out organizations that avoid taxes based on this dicey formula of robot taxation which is still not a law in any country in the world except South Korea. The taxation takes place from individual jurisdictions so that taxable profit will get detected under official norms.
Lowering Job Destruction
The problem of innovation is unemployment. However, robot tax will eliminate this issue and keep employed human forces longer. Robot taxes will also make it easier for people to transfer jobs from one industry to another along with all the required resources and training. This will also enable the government to somewhat reduce the tax burden on start-ups and independent companies. This way, investments can be used for bigger and better purposes.
Universal Basic Income
UBI or Universal Basic Income means everyone receiving a certain sum of money to cover basic expenses. Many people, including Elon Musk, are of the opinion that UBI implementation is a must in the age of automation and UBI is a more cost-effective approach. Studies already reveal that better grants result in better productivity. If UBI becomes the norm, schools, hospitals, or care homes will not suffer depletion of any kind.
Cons
Many people also argue that robot tax will lead to anything significant in terms of efficiency or monetary benefits. So, the following lists some of the probable issues with robot tax implementation.
Classifying what a robot is
What defines a robot? The definition is broad and everything from an actual automation system to a vending machine can be classified as a robot. Hence, when it comes to taxation, there lies a huge gap between opinions as to what classifies as a robot and what does not. Only if every government comes out with their own definition to make this work, taxation can be just.
Reduction in Productivity
Robots are more efficient and hence, more productive than humans. This leads to cheaper resources and higher profits. Instead, taxation on other social intermediates such as land or wealth makes far more meaning.
Prolonging Low Pay
Automation and low pay do not go hand-in-hand. Robot tax instigates low pay leading to more expenses in building the automation. There is also a bar between good and bad work as good work is one that helps in maintaining the quality of one’s life. Many predict that if a country does not invest in automation to improve productivity or if a tax is imposed on companies who invest in robots, it could lead to restrictions in wage growth.
Innovation Damage
The problem lies at the core. If firms do not agree on investing in automation, the whole sector will also unanimously work against it. Robot tax will also encourage development in the technological sector. But reports show the economic growth in first-world countries is also stagnant so the infrastructure for a new innovation right now is next to impossible.
Conclusion
Each technological invention aims at reducing the physical workload of human beings. But according to history, technology has always led to employment. Robot tax, therefore, is currently the only way to capitalize on automation. But there are also certain difficulties that are keeping this from happening. So, it lies on policymakers how the new change will affect social and cultural behaviors leading to a global resurgence.
