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Think Tank Argues Against UK 'Robot Tax'

by Jason Gorringe, Tax-News.com, London

29 May 2018


In a new report, the Institute of Economic Affairs in the UK has argued against the need for the UK to introduce a so-called "robot tax," on profits from automation.

The IEA's report argues that the panic surrounding technological development and the expanding use of robots is largely overstated, based on speculation and limited facts. It said: "In the UK we have at least as high a proportion of the population employed as 100 years ago: technology creates new jobs as well as destroying old ones. Calls for a 'robot tax' to mitigate for a 'robocalypse' are misguided."

The report from the IEA argues that trying to implement such a tax would be beset with complications and in practice could, even if successful, protect just 15 percent of UK workers' jobs. "Shoring up existing jobs in this way could also deter the creation of new jobs as expanding firms would find it more difficult to recruit, and lead to a decrease in investment, as the UK would be out of step internationally," the IEA said.

"There is scant evidence that job displacement is moving faster than the economy's ability to develop new types of employment. Many new jobs are now in small businesses, or amongst the self-employed or 'gig-economy.' These jobs have grown rapidly because, despite decades of growing employment legislation, the UK labor market is still less regulated than many other countries in Europe. Nor are these all low-paid jobs: higher-paid jobs are also growing and the proportion in the top-three occupational categories has actually grown in the last decade."

The IEA opined that a robot tax would have to be based on the profits generated by a robot, arguing it would effectively be a new form of corporation tax. It said a tax on profits from automation would be an inefficient tax, having a negative impact on growth, investment, and innovation, and added that imposing a robot tax when no other nation is doing so would result in the UK losing investment and therefore be uncompetitive.

Report author Len Shackleton said: "We must not be afraid of technological change and the rise of robots. New technology offers us improved living standards and a better quality of life and there is little evidence that job displacement is moving faster than the economy's ability to develop new types of employment. It is often overlooked that with technological change has come the creation of many new jobs already, including IT and scientific professionals. While the future may be uncertain, we should not be pushed into premature and damaging policy interventions on the basis of fears and panics. Protecting against a potential shake-up in the labour market with measures such as a robot tax, subsidies, or further regulation is not the way to go."

TAGS: tax | investment | small business | business | corporation tax | United Kingdom | professionals | legislation | standards | regulation | Europe

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