- It remains to be seen what the final effect of robots on the labour market or public finances will be, but the common consensus is that wage inequality will likely increase
Is There a Case for Taxing Robots?
Is it possible to impose tax on robots by means of a tax on a hypothetical salary that a person would receive if it performed the same work as a robot? Or through a tax based on the value of robots, as is the case with vehicles? These are some of the questions raised in the latest IEB Report entitled “The Taxation of Robots” coordinated by IEB Researcher José Mª Durán-Cabré.
Not too long ago, the concept of taxing robots was considered only in the realm of science fiction, or even as nonsense, but since personalities such as Bill Gates or Nobel Prize winner in Economics Robert Schiller have defended the idea, it started to form part of the debates about the future of our tax systems.
The main argument for defending the imposition of tax stems from the possible negative effect of robots on the labour market. Will the rise in the use of robots lead to an increase in unemployment making many jobs obsolete? And if so, would this result in lower tax revenues?
In this regard, the contribution from Uwe Thuemmel, researcher at the University of Zurich, states that the fall in total employment depends on whether automation is accompanied by an increase in employment in other jobs and sectors (as has happened in Germany) or not (as has happened in the United States). Empirical studies so far suggest that the impact of industrial robots on the labor market is variable and depends on each country.
Also, should the entire production increase, the amount paid to the workers would rise as well, especially to qualified and skilled workers. For this reason Daubanes and Yanni, investigators of the University of Geneva and of the HEC Montreal, respectively, point out in the Report that revenues will not go down, but will probably even rise, if the tax on wages is not regressive.
What type of taxes can be established?
Xavier Oberson, a professor at the University of Zurich, argues that taxing robots is not nonsense, although it is important to agree on a proposal which could certainly take time. First, it is necessary to establish a clear and viable definition of the term robot, which in his opinion includes all kinds of machines with artificial intelligence, thus focusing on the autonomy of robots. And, second, the different taxation options for robots should be examined, including a levy on an imputed hypothetical salary, an automation tax based on the proportion of income relative to the number of employees, or a tax on the value of the robot.
Oberson even raises the possibility that robots themselves could have legal personality, as was the case before with companies or corporations. Therefore, from a legal point of view they can have fiscal capacity.
In his editorial, José Mª Durán-Cabré highlights three fundamental questions on the subject: first, why robots are meant to be taxed; second, what the consequences of taxation would be; and, thirdly, how they could be taxed. Durán-Cabré points out that the three contributions agree that robotisation will lead to an increase in wage inequalities between skilled and unskilled workers, a topic that is already quite contentious in the current debate on taxation. Thus the imposition of tax on robots can be an instrument to consider in mitigating inequality, if there are no other viable measures. Moreover, as with a growing number of taxation issues, the consequences of robot taxation go beyond countries’ borders and should be raised at an international level. Acting unilaterally could be counterproductive.
Durán notes that, to date, there is no academic consensus on whether taxing robots would be the best instrument available to the public sector, much remains to be studied. Thus, it will likely take some considerable time before a robot can, after introducing itself, pose the question: “Do I have to pay taxes?”