BRIGHTON, UNITED KINGDOM — Calls from the British Labour leader Jeremy Corbyn to publicly manage automation this week have led to speculation he is looking to tax robots, but how would that work?
Replacing workers with robots, means less salary and more profit for businesses, but also less taxes on salary for the state to collect. Any robot tax would likely need to fill this gap in public finances.
The Institute for Fiscal Studies estimates that the British government will collect £716.5 billion for the tax year 2016 to 2017. According to the IFS figures 43.1 percent, or £308.6 billion, of this is contributed by the 30 million people in the British workforce.
Separately, a PWC study estimates that 10 million British workers may lose their jobs to automation. If permanent, and not counting the amount the government may save from automation, this would lead to a shortfall of £92.6 pounds, or 30%, in what the British state collects.
A flat robot tax may help fill this gap. However, calls for automation to help people live comfortably via state-provided benefits — such as a universal income — may well see automation taxes rise. Such a move would likely scare off private industry from investing in the United Kingdom.