Brave new tech world
Technological progress is advancing by leaps and bounds. In recent years, we have seen fantastic innovative technologies emerge, which have drastically changed our daily lives and especially our professional lives. Currently, artificial intelligence is on the verge of a major breakthrough, thanks to the Chat GPT software, which has opened a lot of people’s eyes. And yes people are questioning the future of certain jobs as technology evolves further. Platforms like Chat GPT can indeed threaten copywriters, for example. But this also applies to other software such as the instant translation programme Deepl and to Synthesia’s avatar video software.
Recently, Sofie Hens, a female journalist from the Belgian newspaper De Standaard, had her own photo realistic avatar created on Synthesia, only to be asked whether her job as a video presenter would be at risk. She came to the conclusion that it is not, because there is still a big difference between the physical and the artificial version of the presenter.
Those who search the academic literature for it will no doubt fall upon the study on the future of labour in society by Carl Frey and Michael Osborne, both affiliated with the University of Oxford. In their 2013 study, Frey and Osborne argue that 47% of current jobs are at risk in the next 20 years due to robotisation and digitisation. Other studies are slightly less pessimistic. In March 2018, the OECD presented a report stating that “only” 14% of jobs in OECD countries are at risk of being fully automated in the near future. However, that same report also stated that the performance of 32% of jobs will undergo significant changes through the use of technology in the work process.
Of course, technology will also create a lot of new jobs, so only the future will tell whether the technological revolution has created more or fewer jobs. Given the current labour market tightness, this is not the case for the time being.
The technological disruption on the labour market
Although research findings on the impact of the technological revolution on our jobs still vary widely, no one will argue, however, that there will indeed be an impact on the labour market.
This means that the government must also guard against the labour market impact of technological big bang. After all, the current financing model of most OECD countries relies substantially on labour income.
If technology will eliminate jobs, this could have a significant impact on government funding and spending. But in addition, there may also be a significant difference in the tax burden of labour-intensive and labour-intensive firms.
If jobs are lost, the State obviously loses the tax and parafiscal revenues associated with these jobs. What’s more, job losses not only result in less revenue for social security, but also in increased expenditure, since the State has to provide at least temporarily for people who have lost their jobs a replacement income in the form of unemployment benefits. Job loss due to technological evolution, therefore, may put pressure on our welfare model.
However, intellectual honesty also commands some nuance, at least as far as tax income loss is concerned. First, new jobs will be created alongside job losses. This is already the case with new jobs such as privacy manager and cybersecurity analysts, among others. However, these are rather specialised profiles. In addition, companies will often replace jobs with technology only for cost reasons. If working with technology is cheaper than working with employees, this will lead to more company profits and these company profits will then, of course, also be subject to corporate tax.
But if this step is taken, we must also take into account the differences in tax burdens between companies. In labour-intensive sectors where human labour is still crucial, the wage cost will help determine the company’s overall tax burden. This tax burden will be noticeably higher in labour-intensive sectors than in labour-poor sectors where technology does the work. This could also lead to a disruption in the economy.
Taxing avatars?
Should we now make avatars and robots pay taxes? Not immediately no, but with the inevitable digitalisation of the economy, we also need to think more and more about the tax system of the future. In time, we will have to abandon the idea that earned income is the central pillar on which taxation and parafiscality should be supported. If jobs are to give way to technology, the government will have to shift the fiscal focus from labour income to the gains created by human or technological labour. In a way, we should actually go back to ancient Rome where the Romans taxed slaves but not their labour. Today, we need to start making sure that modern slaves – after all, robot is the Czech word for slave – also make their contribution to financing the welfare state. After the internet of things, we are inevitably going to have to move to a taxation of things as well.
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