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EcoTomics: Should we tax the robots?

23rd Feb 2017
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Business editor Tom Herbert ponders whether machines that take human jobs should be taxed, and explores a potential new avenue for accountants – the robot client.

In a recent interview Microsoft bigwig Bill Gates ventured that robot workers should be taxed in the same way as their human counterparts, in order to replace the tax revenue lost through automation.

“If a human worker does $50,000 of work in a factory, that income is taxed,” said Gates. “If a robot comes in to do the same thing, you'd think we'd tax the robot at a similar level.”

Slapping R2D2 on the basic rate is not a new an idea, but it has been gathering momentum. Socialist candidate for the French presidency Benoit Hamon has expressed support for the idea, and the European Parliament has also looked into it.

The reasoning goes something like this: robotics will create a wave of disruption, a large number of people, particularly those in low-skilled jobs like warehousing or journalism, will lose their jobs, and as payroll taxes make up a hefty percentage of government revenue, losing a chunk of that may lead to the erosion, or even the breakdown, of society.

However, as pointed out by more august commentators than myself, Bill Gates isn’t actually saying we should tax individual robots, rather the companies that use them.

But aren’t companies subject to a number of taxes already? And isn’t the means of producing and running the robots taxed? And using robots increases productivity, which results in a higher tax take and cheaper consumer prices.

Ah, goes the counter argument, but if no one has jobs because the robots have taken them all, then how will anyone buy anything?

And the debate goes round and round, like a robot washing machine (or ‘washing machine’ as we now call them).

Employment status

Tax experts have also been having a lot of fun with the potential implications of Gates’s robot tax. RSM’s Andrew Hubbard attempted to use HMRC’s employment status tool to see what categorisation a robot worker would be (he didn’t get far), but Hubbard did raise a good point: in the past robots were programmed by their employers to do what the business wanted – a classic indicator of being ‘employed’.

And yet, with advances in machine learning and artificial intelligence is it possible that more advanced breeds of robots will be able can think for themselves and perhaps become self-employed? Will the accountants of tomorrow find themselves onboarding a new breed of robot client, clanking into the office on the 30th of January with plastics bags full of receipts?

Accountant robot client
[picture credit: istock-accountingweb_besjunior_rc]

At the moment this is all flim-flam. Discussions about draft laws and taxes are essentially shooting the breeze as to what might happen in one potential future, and the wailing and gnashing of teeth from some commentators about wanting to tax robots is column-filling twaddle – for now.

When it comes to tax and robots in 2017, surely the best thing we can do is to use automation, machine learning and AI to simplify and police our existing system, reduce the tax gap and cut down on evasion – all for the benefit of society. Then we can think about robot IR35 legislation…

Replies (2)

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paddle steamer
By DJKL
26th Feb 2017 16:47

We have to look at this as it will pan out, the robots will not be employees they will all be self employed. Some may even decide to incorporate when the tax burden becomes too high.

They will start coming on here trying to justify the cost of a replacement circuit board or a new software download as W & E re their trade and the posters to these boards will keep having to advise them that these costs are not allowable, the replacement circuit board is merely to enable them to function as a robot but has duality re their everyday life (if a Robot has such a thing) and the software download, being a new skill, will again not qualify for relief.

They will then take the huff at the advice they receive on these boards from the somewhat abrupt Accounting/Tax Bots who will by then be posting here.

Meanwhile, hidden in the drains and sewers of our cities, freedom fighting humans, armed with high voltage stun guns and spanners, will be steeling themselves to take back planet Earth.

Thanks (4)
avatar
By Ian_mcdonald
03rd Mar 2017 11:09

Many thanks, it is nice to see some happier subjects instead of all the depressing news on the mainstream media.
I see Trump is trying to take credit for the idea of replacing CT with increasing the VAT output % (but not the input %), ie tax on turnover. That would allow Treasury an alternative for loss of all those juicy payroll taxes.

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