Publication Type

Blog Post

Version

publishedVersion

Publication Date

6-2022

Abstract

The post highlights three main issues that may result from the rapid and widespread automation of jobs: 1) declining tax revenues; 2) inequitable distribution of gains and losses from automation; and 3) social costs of job displacement, such as social support and retraining programmes for displaced workers.An automation tax may be imposed on a temporary basis to manage (slow) the rate of displacement of workers due to the adoption of automation technologies, but should not be a permanent feature. Otherwise, there will be a risk of loss of competitiveness in the long-term, possibly resulting in even greater economic harm.One main problem with an automation tax is figuring out what to base the tax on. Attempts to tax "robots" have faced difficulties in defining what a robot is.A potential solution proposed in the paper is to build on the existing capital allowance/depreciation mechanisms. Such frameworks in many tax systems are schedular, allowing governments the flexibility of attaching a particular tax benefit to each item in the schedule. An automation tax could be determined based on the type of technology adopted and the field it is applied in, correlating with the social costs associated with its adoption (which can be conceptualised as “negative depreciation”).This mechanism could also allow for a distinction to be drawn between employment-substituting technologies, which render human workers redundant and should be disincentived, and employment-complementing technologies, which can be used by human workers to enhance their productivity, and which should be incentivised.

Keywords

Tax Law, Taxation, Automation Taxation, Robot Tax, Regulation, Tax and Regulation, Labour Law

Discipline

Business Organizations Law | Corporate Finance | Tax Law

Research Areas

Innovation, Technology and the Law; Corporate, Finance and Securities Law

Publisher

Association for Computing Machinery (ACM)

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