Taxing the robots

21 February 2017

Andrew Hubbard

We had some fun (well, what passes for fun among tax geeks) considering the suggestion from Bill Gates that robots were now such an important part of the workforce that they should pay tax.

Would they, for example, be categorised as employees or self-employed? I tried to use HMRC’s employment status tool to see if that would give me any help. Unfortunately there was not a question which asked ‘are you a human being?’ so that didn’t get me very far.

Being under the control of the employer is a classic sign of employment. Once upon a time you would have said that robots were controlled by the way that they were programmed but now advanced robots can think for themselves, so perhaps that would mean that they are self-employed.

But it may come as a relief to HMRC that personal services companies are not an issue for robots. The Small Business, Enterprise and Employment act 2015 now requires that every company director is a 'natural person' – before that there was no such restriction. Perhaps this was a very clever pre-emptive strike by somebody within government who saw the problem of robots forming personal services companies and blocked that loophole before it could be exploited!

There is of course a serious point to all of this. Bill Gates and his co-author were not actually saying that robots should pay tax: what they were discussing is how the tax base could be preserved if technology really does start to lead to a decline in the workforce: how should the resulting gap in tax receipts be plugged?

If robots really could do all of the work (including writing this column for me next week!) then their economic contribution has to be recognised somewhere in the tax system. But imposing some sort of levy to slow down progress, which is effectively what such a proposal might entail, does seem to me a backward step.

History tells us that in the end you can’t stop technological change. As a proud Nottingham man I am naturally interested in the history of the Luddite movement, which started very close to where I live. Karl Marx had some trenchant observations on the relationship between workers and their machines but perhaps the Weekly Tax Brief is not really the place to explore his theories...

Let’s instead go back to those robots and, with US taxation policy riding high in the headlines, consider another famous political slogan – ‘No taxation without representation’.  One hundred years ago almost to the day Parliament started to debate the legislation which eventually gave votes to at least some women in the UK.

So will a new Mrs Pankhurst arise campaigning for ‘votes for robots’?  Is it any more unlikely than some of the political developments we have seen over the last year!

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