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Taxing robots is a bad idea

Taxing robots is a bad idea

As more jobs become automated globally, prospects of unemployment have sparked worldwide debate on whether governments should impose a tax on robots that are taking over human jobs.

This is not a good idea, as it will not counteract the negative effects of automation, said Professor Rasigan Maharajh, nodal head of the Department of Science and Technology and chief director of the National Research Foundation's Centre of Excellence in Scientometrics and Science, Technology and Innovation Policy. He was speaking at the Global Work Tech Scenarios 2050 conference, held in Pretoria yesterday.

Discussing the challenges and opportunities presented by the fourth industrial revolution, Maharajh explained that, while global discussions about automation tax policies are in their early stages, the concept of imposing a robot tax "does not make sense".

With artificial intelligence and machine learning on the rise, automation has been forecast to eliminate 25 million jobs by 2027, mostly impacting the service and manufacturing industries.

Experts believe automation technologies will enable enterprises to avoid paying taxes, leading to fewer taxes collected by governments and resulting in dire repercussions in social services delivered.

"Imposing tax on robots would not offset the social costs implied by automation. Robots or anything other than human beings cannot create value in an organisation; they can only make the process of value creation easier, less troublesome and less unsafe, by augmenting human labour," Maharajh pointed out.

Last year, Microsoft founder Bill Gates called for income tax to be imposed on robots, saying by not paying taxes, the machines have a significantly unfair advantage over employees.

Gates suggested if a machine replaces a factory worker who was making $50 000 a year, the robot tax should equal the amount that both the business and the worker would have contributed in taxes and social security.

Early last year, South Korea took the first step to introduce robot tax, by limiting tax incentives for businesses investing in automation.

At around the same time, the European Parliament voted against a proposed "robot tax", arguing it would have a negative impact on competitiveness, innovation and employment.

Maharajh believes a direct tax on robots is not the answer, explaining that policymakers should rather focus on ensuring local companies pay their taxes correctly, as many are guilty of tax evasion.

"Rather than imposing a robot tax, we need to ensure that companies are rightfully paying their taxes based on the revenues they generate, whether or not they have deployed robots in the workplace. In SA, employees carry most of the burden of paying corporate tax off their salaries. Policymakers should use the tax system to ensure that growth is more evenly shared."

If corporate taxes are adequately paid by organisations, there should be enough funds for the redistribution of income, ensuring fair contribution towards social services, he asserted.

Collaborative robots

According to a report release by Accenture: "Creating South Africa's future workplace", around 5.7 million jobs in SA will be at risk over the next seven years due to automation. This is expected to have a crippling effect on the economic growth of the country.

While there are many well-founded concerns about the number of jobs projected to be replaced by automaton, Maharajh said he believes humans and machines are more likely to work together as a cohesive workforce.

"In most cases, robots are not replacing anyone, but rather fulfilling a function where a certain capability did not exist. While blockchain, artificial intelligence, robots and big data are all useful to organisations, they can never replace the true value provided by human beings.

"I worry that our political leaders have very little understanding of the scale of the challenges that confront us in the face of the fourth industrial revolution. They need to educate themselves through social engagement with the relevant bodies to put in place the necessary framework to prepare the workforce for jobs of the future."

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