By: Bikal Dhungel
Few days ago, Bill Gates was quoted saying that he finds it a good idea to tax robots because human labour is being replaced by robots in a rapid pace. The cashiers in the Banks are replaced by ATM machines and the supermarket counters are being operated as self-service in many places. This phenomenon is business as usual in rich countries and are being implemented in developing countries as well where unemployment is still high.
Mainstream economics says that countries with excess labours should focus on labour-intensive factor or production. However, globalisation makes it increasingly difficult to implement such theories because time is changing faster and technology can cross the border without many hassles.
The EU voted for the same policy of taxing the robots as companies increasingly place them but the parliament decided against it. The argument was that it would reduce the incentive to innovate. However, the tax could be kept so minimal that it would not stop companies from innovating. A worker would get at least 15% deduction from his gross pay depending on the country. Robots could be charged 5% tax on their labour if the company is not facing loss. There should be individual decisions based on the health of the company. So that the incentive is not lost, the taxes from the robots could be deposited in a fund that would be directly invested in research and technology so that it would fuel other innovation, not hamper it. The argument is equally valid if we take the human labour as example. Some group of people go to work, pay a portion of their income as tax and the government uses it for common causes like education, infra-structures etc, which at last is good for everybody. Only less people stop going to work at all because they have to pay taxes.
The cost of not doing this is even more complicated. Looking the actual figures about the banks, they are reducing labour costs because ATM machines are doing the job. Since the development of IT based online banking, people also manage their account themselves. The direct role of bank is only to provide a platform. However, banks are making huge profits because they are saving costs. Where their profits are going is a matter of hot debate. Mostly, they are given away as dividends to the shareholders. This means, people investing in shares and stocks are getting paid for putting their money in the bank which is called capital gains in finance. This has led to massive inequality. The recent statistics shows that the growth in capital gains has by far surpassed the growth of labour’s wage causing the inequality to rise in the highest level ever globally. Why inequality is bad for the society, see the previous articles.
To conclude, research and development in the sectors that matters are under-funded and at the same time inequality is expected to rise even further in the future. A fund consisting of taxes collected by the usage of robots which is either managed by an independent body or the business itself can be invested in its own research and development which in the long term will help to innovate even more. Bill Gates is not an anti-capitalist who wants to punish companies for being innovative but he is a philanthropist who understands that thinking in a broader term for the social good is even more important than to let individual businesses increase the profit for themselves by reducing costs. Bill Gates and many other billionaires have given away their vast amount of wealth for fighting diseases, providing scholarship, educating in IT sector etc. This will not divert the capital away from productive sector but create even more innovators in the future.
