inside issue #15.
What does the robot tax mean to you?
Nobody likes feeling replaced. It is a fear that has been portrayed in cinema for years, often showing humans being replaced by robots. As factories become more automated, are we at risk of this fear becoming a reality?
The 1975 American thriller, The Stepford Wives, depicts a family that relocates to the suburbs, where all is not as it seems. Eventually the protagonist, Joanna, discovers that all the wives in the town have been replaced by robots, created to be mindless housewives for their husbands.
Films like The Stepford Wives suggest that there is hostility towards robots becoming more prominent in society. As we enter the Fourth Industrial Revolution, businesses and governments need to consider how to prevent this hostility from impacting the industry.
While there are no current plans to replace humans with robots, countries around the world are purchasing automated equipment to assert themselves as leaders in manufacturing. According to the International Federation of Robotics, by 2019, more than 1.4 million new industrial robots will be installed in factories around the world.
Higher levels of automation can improve productivity and output. Industrial robots improve accuracy and can complete tasks that are difficult for humans. Robots can also work for longer hours and do so without a salary, saving manufacturers money that they could invest elsewhere.
The upward trend of automation has brought about a fear that as the number of robots increase, so too will unemployment. A study by Mckinsey Global Institute predicted that by 2030, as many as 800 million jobs across the world could be lost to automation.
Fewer salaries to pay will save manufacturers money in the long term, but it will also mean fewer people will pay tax to support the economy. To compensate for this, governments could implement an automation tax to slow the adoption of automation and increase funding.
What is the tax?
A robot tax would charge companies that replace employees with automated equipment to compensate the displaced workforce. Historically, an inanimate object has never been taxed, so the idea of a robot tax may seem farfetched. Rather than charging the robot itself, governments would tax the profits generated from products manufactured by automation.
Microsoft founder Bill Gates originally suggested the tax to control the adoption of automation. He also explained that the revenue raised could be used to retrain employees, placing in them in roles better suited to humans.
Opinions on the tax
Since suggesting the policy, many governments have considered whether they should implement the tax. South Korea was one of the first countries to adopt a robot tax, which now means it will limit tax incentives for investing in automation and compensate for lost income It will also raise money for welfare needed when there is a rise in unemployment.
The UK and the US have always encouraged the adoption of automation and there are incentives to do so. Both countries are debating whether a robot tax is necessary and how it will impact their economies as well as citizen wellbeing.
In 2017, the European Commission voted against imposing a robot tax across the EU as it believes that automation will bring prosperity. Voters also argued that a robot tax may stunt innovation, causing Europe to fall behind in the industry.
Since the First Industrial Revolution, machines have assisted human workers, changing their job requirements. We no longer have professions such as switchboard operators, lift operators or typists because of technological advancements.. Instead of focussing on the lost jobs, businesses need to invest in retraining employees to help them transition to new ones.
There is a lot of debate about how automation will have an impact on the economy, employment and society. Governments need to consider how to prevent robots replacing humans and causing unemployment.
Governments need to consider how to prevent robots replacing humans and causing unemployment
If a tax is implemented by a government, it must decide how the raised funds will be used. For example, it could finance a universal basic income to redistribute money around society, regardless of profession.
The debate around the robot tax suggests that there is still some hostility towards the adoption of robotics. However, we are not at risk of wives across the world being replaced by robots any time soon.
To remain competitive in the manufacturing industry without increasing unemployment, governments must consider how they can manage the adoption of automation and raise funds to retrain displaced workers. Only time will tell the best way to do this, but a robot tax could be the place to start.