|Dawn of the
robots is a new entry this year
Robots are taking human jobs. Technology is evolving our
workforce. Likewise, robotic software that replicates a human's
actions to execute repetitive tasks is starting to emerge and,
for example, will start to replace an accountant's process
work. Accounting firms are not only employing these bots to
manage their digital data dirty work, but are advising their
clients to do so too.
For financial institutions, robotic process automation (RPA)
in tax compliance has been the clearest glimpse into a future
where machines automatically file taxes with tax
A PwC report predicts that there is a 32.2% risk of
financial and insurance jobs in the UK being automated by the
The speed at which automation and the business cases for
replacing human jobs are developing, and the growing number of
discussions about taxing robots, has earned this development
its place in this year's Global Tax 50.
However, Bill Gates, American philanthropist and co-founder
of Microsoft, has emphasised the importance of being able to
manage the displacement of tax revenue that will be created
from replacing humans with robots – if individuals are
not employed and paying labour taxes as well as spending their
hard-earned cash on goods and services that include an indirect
tax, then who will fill this gap?
Essentially, a robot tax charged on the company 'employing'
the robots could act as security for the displaced human
worker. This is something the South Korean government is
considering by reducing the amount of tax relief businesses get
from corporation tax for automation equipment, dubbed a 'robot
tax'. Similarly, in the UK, opposition Labour Party leader
Jeremy Corbyn wants to create a fund to retrain staff who lose
their jobs because of new technology. On the other hand, the
European Parliament rejected a call from European lawmakers for
EU-wide legislation to regulate the rise of robots in February
2017. No further official legislative efforts have been made in
the EU as yet.
Nevertheless, Gates believes a robot tax is the future.
"Certainly there will be taxes that relate to automation,"
Gates said in an interview with Quartz where he first brought
up the idea for the levy. "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 has been a strong voice on the issue on the global
economic stage, recently presenting a report at the G20 summit
in Cannes, France, to encourage innovation and development aid.
Among a tobacco tax, a financial transaction tax, and an
aviation and bunker fuel tax, Gates stressed that investment in
innovative forms of revenue would help curb the uncertainty of
the current economic environment and the developing risk to
Listening to Gates is Jane Kim, an American civil-rights
attorney who has been working with public policymakers to draft
a robot tax in Silicon Valley.
However, tech leaders and international organisations are
calling the tax an "innovation penalty", claiming that
automation softwares are productivity tools and taxing the use
of robots will undermine technological innovation and
The government should embrace innovation, not tax it
– right? So how do you solve the societal challenge
that automation will eventually create?
Gates, like Corbyn, believes a tax on the use of robots
could help to retrain the displaced workers in other roles. He
also says the speed of automation could be temporarily slowed
down to examine the impact of the changes.
Meanwhile, after months of research and discussions with
technology leaders in Silicon Valley, Kim launched the Jobs of
the Future Fund to build support among individuals and
organisations to "learn about and discuss the final language
for an upcoming ballot measure". The campaign has recently
hosted the first public forum to begin the conversation about
how we prepare for a future in which automation displaces
millions of workers.
"It was a great discussion that showed the diverse coalition
of individuals and organisations that are focused on making
sure this transition actually benefits workers and helps us
create more economic opportunity, and we're looking forward to
many more in upcoming months," Julie Edwards, spokesperson for
Kim, told ITR.
The question now is what defines what a robot is and what
constitutes job displacement. For the Jobs of the Future Fund,
this will be at the core of upcoming discussions with
individuals and organisations ranging from organised labour and
community groups to workforce development organisers and
Focusing on industry-specific solutions will be important to
finding an answer. "Given how widespread a problem this will
be, it is likely we will need multiple solutions –
some industry-specific, some community-specific, some focused
on retraining displaced workers, some focused on educating
young workers towards jobs that cannot be automated and some
focused on elevating currently low-waged work that cannot be
automated. The important point is that we want to make sure
that we're working towards a future where more Californians can
have meaningful, middle-class jobs," Edwards said.
Although no one is clear on what needs to be done, the key
challenge is to find a way to tackle future imbalances in the
economy from the displacement of human workers by machines. And
this extends to the whole digitalisation of the economy. In
April 2018, the OECD will present a report to the G20 with
concrete proposals to solve upcoming issues in digital
advancements, Pascal Saint-Amans, director at the centre for
tax policy and administration at the OECD, told
There are a lot concerns when it comes to the rise of
technology, but it is expected – perhaps most
reassuringly – that automation will change the role of
the tax professional rather than eradicate it. Machines could
simply save time on the number crunching front and leave the
judgment tasks to humans. This might actually lead to more
jobs, believes Michelle Lee, US tax robotics process automation
leader at PwC.
"If history tells us anything, there were speculations of
job losses when spreadsheets and computers were introduced into
the tax compliance process, but instead we saw significant
growth of jobs in tax departments," she says. "It's certain
that how we perform the work and the skillsets will change, but
this will create new opportunities."
Perhaps there is a future where human job displacement by
robots is a cause for celebration rather than worry. Whatever
the scenario, only with the help of forward-thinkers such as
Gates and Kim can we reach a solution.