Robots need to be taxed globally, says the expert

18. 1. 2022
The global labor market is beginning to face massive robotics, which raises questions about how to tax these robots. The reason is the simple assumption that the fewer people work in the future, the more state budget revenues will fall. Instead of people actively contributing to the budgets, some of them become recipients of various grants. Pavel Semerád from the Faculty of Business and Economics at Mendel University in Brno is also thinking about how to design taxation so that it is fair and beneficial. He emphasizes the need for a global solution, otherwise, tax havens are very likely to emerge in this area as well.

“The labor market will change dramatically. It is estimated that one-third of jobs will be lost by 2030. They will be replaced by robots. New jobs will be created, but some people may not want to retrain. It is also likely that the transition will be so rapid that some people will not be able to retrain so quickly and will need more time to do so. It is, therefore, necessary to start thinking about how to replace the shortfall on the state budget side,” Semerád explained.

The most at risk are people doing monotonous work that can be automated. According to Semerád, it is enough for one company to take this step, and other companies in the given field will have to adapt to this trend. The loss of jobs will thus pick up a very fast pace. “The state will lose income tax, health and social insurance and, conversely, will have to pay unemployment benefits and social benefits. That’s a lot of money,” Semerad said.

The speed of robotization may be different in each state, but it will affect everyone. That is why a global solution is needed and also not very administratively complex. “If the G7 and other major economies are in favor, there is a chance that the tax will be introduced globally. But if, for example, China or the US oppose it, it will be complicated or even impossible. And the question is how to persuade them because sanctions create inequality. and hostility, “says Semerad. Discussions are already taking place around the world, but rather at local levels. According to Semerád, Bill Gates talked about the need to tax robots as early as 2017. “Companies will not be completely enthusiastic, but they are more or less counting on it,” Semerád said.

“So far, we can’t say how to define such a robot. It’s not just robots that work in factories. Robots in the form of artificial intelligence approve loans in banks, use them as chatbots in marketing, and large technology companies use robots to obtain a lot of user data that It would be possible to evaluate them according to chips, microprocessors, memory volume, or according to how many people at work the robot replaces,” lists the possibilities of Semerád.

A flat-rate increase in personal or corporate income tax is possible. “But it is administratively demanding. Another option is to abolish depreciation on robots, or the VAT on robots could increase, or the tax rate on products produced by robots. We are in favor of a separate tax on robots,” Semerad said.

Simultaneously with the introduction of the tax, the states, including the Czechia, should change their approach to education so that people want to be educated all their lives and are prepared for the fact that they can change their field several times. Moreover, not only in the Czech Republic, job losses are facing dramatic aging of the population. This will intensify after 2035, when “Husák’s children” will retire. “When thousands more people lose their jobs due to robots, it will place a disproportionate burden on the state budget. “It will definitely not be possible to maintain the standard to which people are accustomed today,” Semerád added.

Contact for more information: Ing. and Ing. Pavel Semerád, Ph.D., MBA, Department of Accounting and Taxes FBE MENDELU,, phone.: 731 616 306

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