Nothing is certain – especially robot taxes

Green Party’s proposal raises more questions than answers

Nothing is certain – especially robot taxes

By Sarah Dobson

So, the Green Party has just proposed a “robot tax” as part of its platform ahead of the federal election. They feel the money saved by employers through automation should be put back into training, reskilling and supporting displaced workers.

This is an idea that’s gained some fanfare over the last couple of years, as fears of automation taking over swaths of jobs play out in the news.

Most notably, in early 2017, Microsoft founder Bill Gates said governments should tax companies’ use of robots as a way to slow the spread of automation and fund other types of employment, according to an interview with Quartz, a business news organization.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

Gates’ comments followed a proposal considered by European Union lawmakers that would have imposed a robot tax on owners to fund support for workers put out of a job by robots — but did not pass.

Taxing the robots

But there are no black-and-white answers when it comes to a robot tax.

The Frankfurt-based International Federation of Robotics certainly took issue with Gates’ idea, saying it “aims to solve a problem that does not exist: Empirical analysis of economic data and forecasts shows that automation and the use of robots create new jobs by increasing productivity.”

“This is in line with the historical experience of technological revolutions, last seen when computers and software automated the business world. To tax production tools instead of their profits would have a negative impact on competitiveness and employment.”

Similarly, Noah Smith of Bloomberg related in February 2017: “It’s very hard to tell the difference between new technology that complements humans and new technology that replaces them. This is especially true over the long term. Power looms replaced human weavers back in the Industrial Revolution, but people eventually became more productive by learning to operate those looms. If taxes had slowed the development of power looms, the eventual improvements would have come later.”

Even the Green Party admits it doesn’t have the answer on how a robot tax would work --- though it’s sure one is needed — as party leader Elizabeth May said it would be complicated to implement and the Green Party would study how to do it properly.

“There are a number of think tanks around the world looking at what will happen with artificial intelligence. So, we can’t claim [a robot tax is] our own idea but we would be the first government around the world to prepare for this,” she said.

“If huge swaths of our current workers are replaced by robots, we have a problem with workers… they drop through a trapdoor; at the same time, there’s a shrinking of revenue to the government as workers are replaced by artificial intelligence. Right now, there’s a very active sector of academics and think tanks looking at this but a lot of political parties aren’t aware of it at all.”

Job loss or gain?

A big reason why the robot tax is so complicated is there are no easy answers when it comes to automation. Every few weeks, there’s a new report either proclaiming the end of mankind as robots take over the world, or declaring the best of mankind as robots make the world a better place.

A June 2019 report from Oxford Economics estimated up to 20 million manufacturing jobs would be lost to robots by 2030, while many other sectors would be “seriously disrupted.”

And yet the rise of the robots “will boost productivity and economic growth. And it will lead to the creation of new jobs in yet-to-exist industries,” said the group.

Similarly, a 2018 report from the McKinsey Global Institute said, “automation and AI will life productivity and economic growth, but millions of people worldwide may need to switch occupations or upgrade skills.”

Between almost zero and 30 per cent of the hours worked globally could be automated by 2030, said the report:

“We estimate that between 400 million and 800 million individuals could be displaced by automation and need to find new jobs by 2030 around the world… New jobs will be available… However, people will need to find their way into these jobs. Of the total displaced, 75 million to 375 million may need to switch occupational categories and learn new skills.”

There’s piles of research available looking into the implications of automation and a robot tax, each with its own agenda. The Green Party, of course, is looking to protect workers, and no doubt lower-skilled employees will face a harder battle.

But it’s hard to fight progress, whatever shape that takes, so before we start calling for a new type of tax — or looking at other solutions such as universal basic income — we have to understand the full consequences of automation first. Because the mixed messaging of “millions of jobs lost” with “greater productivity and economic growth” is not providing much certainty either way.

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