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18 January 2019
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Nigel Smith

04 June 2018 Nigel Smith

Nigel Smith, managing director at TM Robotics, wonders whether robots should pay taxes.

The world’s first robot tax was introduced in South Korea last year amid fears that a rise in automation and robotics could lead to mass unemployment. 

This so-called robot tax was not actually a tax at all. Instead, the country limited tax incentives for investments in automation, lessening existing tax breaks.

South Korea’s announcement sparked debate as to whether a robot tax would be advantageous in other countries.

Bill Gates called for a technology levy, saying that a tax could balance the government’s income as jobs are lost to automation. The levy was suggested to slow change and provide money for government to increase job opportunities in other sectors.

While most operating in the robotics sector would disagree with the idea of a tax on robots, the debate raises questions of how we tax employment in Britain – and how technology could affect this. The obvious fear for government is that replacing people with robots could reduce national insurance contributions (NIC).

Perhaps the answer is switching to a system where, rather than paying tax per employee, NIC could be formulated based on a company’s overall operating costs. Using this method, NIC could take account of the impact of all forms of advanced technology.

Robots don’t always replace a human job; often they work alongside people to reduce the risk of injury – particularly in the supply chain.

The bottom line is that robots create jobs, they don’t take them away. This is supported by the UK government’s recent Made Smarter review on digitalisation in industry. It concludes that over the next 10 years, automation could boost UK manufacturing by £455 billion, with a net gain of 175,000 jobs.

Robots are tools and they will create work, especially new kinds of work – taxing them would be a tax on net job creation. We should be giving tax breaks for firms investing in robotics.

Nigel Smith is managing director at TM Robotics