For Robots, Death and Taxes Too?
Benjamin Franklin famously said, "In this world nothing can be said to be certain, except death and taxes." Turns out that this might ring true not only for us humans, but robots too.
Will We See a Robot Tax?
In a recent interview with Quartz, Bill Gates mentioned that the robot that takes your job should pay taxes. His rationale is that for the human employee who used to do the work, his or her income is taxed. Therefore, it is logical to tax the robot who is displacing that worker and doing his or her job.
He went on further to explain that the tax revenues generated could be used to fund government programs in areas like elderly care, education and workforce retraining. The end result is that the disruptive impact of automation is better managed and the society on the whole is better off.
The publication The Economist though begs to differ. In Why taxing robots is not a good idea, they argued that taxes de-incentivize capital investments in robots. The end result is that the overall productive capacity of the economy is lowered below its potential, resulting in rising prices which then have a knock-on effect on consumers.
More importantly, they argued that if anything, automation is not happening fast enough, as evidenced by the slowing growth in productivity and consequently GDP. This is especially a worry for many developed (and some developing) countries facing a demographic time bomb of declining birth rates and aging population.
How to Handle Robotic Disruptions?
With headlines like Mark Carney declares that robots could put 15m Britons out of work, this debate is going ever going to intensify.
On balance, we concur with Bill Gates’ point of view. The trend towards automation is inevitable. Yet, as a responsible stakeholder in our community, we do recognize that the benefits of automation will not be evenly distributed – businesses will benefit from the productivity boost and cost savings while workers, especially in vulnerable sectors like transport and warehousing, face grim prospects. This will result in tensions, not unlike what we are seeing in the recent backlash against globalization.
We believe the challenge lies not in implementing the robot tax per se. Through automation, businesses should be able to generate more profits to more than pay off these taxes. Rather, the difficulties lie in how governments are going to come up with equitable ways to share and redistribute the tax revenues. The end objectives should be to generate economic growth that is both inclusive and sustainable in what some has termed as the Fourth Industrial Revolution.
Workforce Reskilling and Retraining is Key
Besides a robot tax, others have proposed a universal basic income too. Regardless of the policy tools deployed, we think it is important to understand and mitigate the disruptive impact automation has on our workforce, particularly the low skilled workers.
We suggest governments to focus on and support workforce reskilling and retraining, and to emphasize on the importance of lifelong learning. Furthermore, more research needs to be conducted on the Future of Work and what it means for the future generations of workforce coming on board. Certainly, we think that there is definitely still a role for humans to play, particularly in areas where human empathy and understanding is valued.
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