The current automation wave driven by advanced robotics, artificial intelligence etc., are going to replace human labour dramatically. Already, several studies including that of the World Bank predict that robotics and machine learning will replace around 30 to 60 per cent of the jobs done by the humans.

What is robot tax? What is its logic?

When robots displace human jobs, they are destroying income of individuals. In that case, the government also may lose income tax from individuals. Given this possibility, there is a demand that a tax should be imposed on robots or those who deploy robots.

Robot tax is a proposed tax on firms that use robots in their businesses.

Economic historians warn that the quantum of job loss can’t be compared to the previous wave of industrialisation. “The number of jobs lost in 1890-1914 was nothing like today,” Mr Joel Mokyr, an economic historian was quoted by Financial Times. Now there are large number of jobs including – insurance underwriters, bank tellers and representatives, construction workers, farmers, taxi drivers, manufacturing workers, journalists and even movie stars who are under job loss threat due to automation and robotics.

Why we need a robot tax?

The idea of robot tax got fire with Bill Gates demanding for a serious rethinking by the government. In an interview with quartz recently (Febr 16, 2017) Gates, world’s richest person, pointed out that robotic activity and their deployment is going to alter the labour markets significantly. A tax on them is a fiscal necessity. He demanded a tax on industrial firms using robots for production. The revenue from robot tax should be used for social expenditure like welfare of the elderly, education of kids etc.

According to Gates, since robots displaces individual income and their tax contribution, an equivalent tax on robots is justifiable.

Another advantage is that such a tax will slow down the pace of automation and thus will reduce labour displacement. Taxing the robots and using the money raised from robot tax to retrain the humans will be one way to deal with increasing labour displacement created by robotics.  

The risks of robot tax

If such a tax is imposed on automation, economic historians warn that there will be disincentives for invention and innovation. Taxing technology is not good for a progressive society. Rather, regulation on deployment of robots can be made. Here, the EU Parliament has voted down a proposal for robot tax recently. According to the EU legislatures, good regulation and timely updated guidelines will save labour from the attack of robotics and automation.