The substitution of human labour with robotic technologies is challenging the European welfare systems, generating a complex debate about the policies that should be adopted to face this process. The different academic and political perspective on this issue vary greatly, as do the possible economic and social impact of such views. One suggestion that is currently being debated in the European Union, is the creation of a European robot tax meant to finance a universal basic income. The critiques and the appraisals generated by this proposal bypass the traditional divisions between neoliberal and socialist political views on society.
Various hypothesis has been made regarding the long-term effects of employing advanced robotic technologies, especially regarding the negative consequences for the human labour market. In 2013 a research conducted by the University of Oxford suggested how, in countries such as the United States, 47% of the current human employment could be substituted by robots in the near future (Frey and Osborne, 2013). To date, there is not a general scientific agreement around these numbers, and some commentators think that the negative effects of this process would be compensated by the lower costs of production and, consequently, by an increased demand for both goods and labour (Autor, 2015).
What is hard to deny is that many human skills, especially in the manufactory industry, will be replaced by robotic technologies at an increasing rate. The unemployment generated by this process could deeply challenge the European welfare systems, already under pressure in many countries: the necessity is to either relocate the unemployed workers, training them for jobs where robots are not competitive, or to provide them with the necessary resources for survival, for example through basic income policies.
In both cases, more economic resources will be necessary, and a European fiscal system under stress due, among other factors, to the population ageing (Bengtsson and Scott, 2009), could have serious problems in facing this scenario. Addititionally, the substitution of human workers with robots could reduce the tax revenues of European countries: a robot does not pay taxes, and therefore fewer resources will be available to finance the welfare policies.
Starting from this perspective, Mady Delvaux, a socialist member of the European Parliament and vice-chair of the EP’s Committee on Legal Affairs, submitted a report to the European Commission on Civil Law Rules on Robotics, suggesting the necessity to introduce an European tax for companies substituting human work with advanced robotic technologies (Delvaux, 2016).
The report contains various proposals regarding ethical principles for the development and employment of robots and artificial intelligence, European regulatory frameworks for new technologies such as self-driving cars, and the institution of new European agencies aimed to promote and coordinate researches on AI and robotic technologies. Most of these proposals have been accepted by the European Parliament in the February of 2017, but the points regarding the so-called “robot tax” encountered the opposition of the right-wing coalition in the European parliament. In the most controversial and debated article of the report, Mady Delvaux suggests how
“Bearing in mind the effects that the development and deployment of robotics and AI might have on employment and, consequently, on the viability of the social security systems of the Member States, consideration should be given to the possible need to introduce corporate reporting requirements on the extent and proportion of the contribution of robotics and AI to the economic results of a company for the purpose of taxation and social security contributions; takes the view that in the light of the possible effects on the labour market of robotics and AI a general basic income should be seriously considered, and invites all Member States to do so” (Delvaux, 2016, p.10).
The opposition of the right-wing alliance to this passage can be summarised through the declaration of Roberto Viola, Directorate General for Communications Networks of the European Union: “Robots will perform the most degrading work […] general basic income and taxes on the production of robots are old recipes. The society of robots needs a new strategy […]” (D’Alessandro, 2017).
The position of Viola is close to the one expressed, among the others, by James Bessen, economist at Boston University’s School of Law, that underline how “although automation will lead to further job losses in manufacturing, warehouse operations, and truck driving, the overall impact of automation across most industries will be to increase employment” (Bessen, 2017), due, as already mentioned, to an increased demand for goods and services. For this reason, according to this perspective, taxing robots would not solve the problem, it would just slow job creation, increasing the economic problems of the interested countries. The next section will expand this analysis, questioning if the debate around these issues can be actually understood through a classical contraposition between neoliberal and socialist political positions, and highlighting the difficulties of introducing a “robot tax”.
Beyond the political debate
The political debate that took place inside the European Parliament may lead to an analysis of the Mady Delvaux’s report through a contraposition between neoliberal and socialist economic perspectives, traditionally characterising the European political arena: on one side the centre-right coalition, against a strong intervention of the State on economic matters, and on the other one the centre-left, in favour of welfare policies financed through the taxation of the private sector. If this approach can partially explain the parliamentary process of the report, looking beyond the political debate is possible to define a more complex reality.
Two cases can be discussed in this sense: from the one hand, Microsoft founder Bill Gates, hardly classifiable as a socialist, supported a thesis similar to the Delvaux’s one, supporting the introduction of robot taxes, in order to temporarily slow the spread of automation and to fund other types of employment (Delaney, 2017). On the other one, Yanis Varoufakis, former finance minister of Greece, professor of economics at the University of Athens and founder of the left-wing movement DiEM25, strongly criticised the “robot-tax” proposal, suggesting how “a tax on robots would not ease inequality and offset the social costs implied by automation” (Varoufakis, 2017).
Through these examples, it is possible to understand how the necessity to find new solutions for the future of welfare-state systems is transversally shared, as well as the necessity to involve governments in this process, but also how the “robot tax” solution could encounter many difficulties in its implementation. Three relevant critical points of the Delvaux’s proposal can be summarised as follow:
1) Defining what is a robot: what should be taxed? According to the International Organisation for Standardisation, for example, an industrial robot is an “automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes, which may be either fixed in place or mobile for use in industrial automation applications” (ISO, 2012). But should the tax involve artificial intelligence in the form of software algorithms? If not, as suggested by Robert Seamans, “the robot tax ends up being a tax borne primarily by the manufacturing sector, and not by other sectors of the economy that will likely invest heavily in automation, including autonomous vehicles in trucking and transport, smart conveyor belts in warehouses, electronic checkouts in retail, etc” (Seamans, 2017)
2) Defining how much the robots should be taxed: a procedure to determine it, without setting the tax authorities against business, could be to use an average “human income” as a parameter. Anyway, as suggested by Varoufakis, a human income may vary over time, accordingly to various economic parameters, while a robot taxation can only be fixed or arbitrary fixed (Varoufakis, 2017). Secondly, robots could be employed for tasks previously not existing, and how should the tax amount be determined in this cases, without a historical parameter?
3) Lump-sum tax scenario: in order to avoid the previous dilemma, governments could choose to introduce a lump-sum tax, a fixed amount of money that companies should pay every time they replace a human worker with a robot. In this case, the problem would be again the first one if for example a form of automatisation is introduced into the software of a previously existing machine, the lump-sum tax on robots would become a sales tax on that machine. Govern a similar scenario could be extremely complicated and economically dangerous.
The European countries, as well as the European Union, should find a way to protect and adapt their welfare systems in the age of robots. It is urgent to identify new solutions, in order to find the resources necessary to relocate the employees who will lose their jobs or finance basic income systems. Anyway, tax robotic technologies could be a strategy with numerous implementation difficulties, as shown by the debate characterizing this proposal.
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