A ‘robot tax’ would deter businesses from much-needed investment in technology, argues Co-operative party general secretary Claire McCarthy
You cannot turn on the radio or open a newspaper now without being confronted by a dystopian story about the future impact ‘the robots’ will have on our labour market. As many as 15 million jobs are said to be at medium to high risk of being automated. That is almost two-thirds of all the jobs in the United Kingdom. Previous industrial revolutions have seen repetitive, low-skill jobs washed away by advances in technology. This time, as robots become more advanced and intelligent, the jobs at risk of disappearing look rather more middle class and professional – accountants, surveyors, journalists and the like.
To tackle both the tax gap such a shift would create, and to meet the social need created by it, it has been proposed by the unlikely policy bedfellows of Bill Gates and French Socialist presidential candidate Benoît Hamon that a new tax on robots should be introduced. This revenue could then be used to invest in skills and education or the provision of a universal basic income.
It sounds like a good idea. It is increasingly acknowledged that our tax system is falling hopelessly behind social and economic trends. Look beyond the surface though and such a policy risks being counterproductive.
Whatever the government rhetoric, the British economy has some pretty serious weaknesses, not least our stagnating and uncompetitive position on productivity. This is being partly driven by record low investment by UK companies. Corporate investment in fixed assets has fallen from 11 per cent of gross domestic product in 1997 to eight per cent in 2014. Companies are hoarding cash or paying it out in shareholder dividends instead of investing it in the future of their companies – to all our detriment.
If we want to turn the tide on growth and productivity in the economy we need companies to be investing more in technology and innovation, not less. Additional taxes on such investment could be counterproductive, not least for workers who will rely on productivity gains to deliver any improvements in living standards as inflation rises.
Instead, policymakers could focus on the vital question of who reaps the rewards if and when productivity finally begins to rise and more broadly on how we can build an economy which distributes the spoils more fairly.
To do this, firstly government needs to act on corporate governance reform. Britain’s workers need companies which invest in the long-term interests of their businesses including their workforce; pay their fair share of tax and see it as a duty to do so; and see investing in the skills of their people, and in technology and plant, as two sides of the same coin. Our current short-termist corporate culture does not deliver this.
Secondly, serious consideration should be given to compulsory profit sharing so that employees can share in the success of their companies whether driven by technological innovation or not – as well as new support for companies wishing to make the switch to employee and other forms of cooperative ownership.
And thirdly, government must ensure that the tax system does keep up with the pace of change and the demands for greater fairness and corporate responsibility. This requires a thorough and comprehensive approach rather than eye-catching individual initiatives, as Philip Hammond has learned.
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Claire McCarthy is general secretary of the Co-operative party and a member of the Future of Work Commission. She tweets at @CoopClaire
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