Robot Tax

With the technology brought by the Fourth Industrial Revolution, robots and digital service activities that are included in every moment of our daily lives have brought the employment of robots onto the agenda, and the necessity of robots and their advantages compared to human employees in the new working order created as a result of the measures taken against the COVID-19 outbreak started to draw more attention.

One of the most striking suggestions on robot-related issues that started to be discussed before the COVID-19 outbreak was Bill Gates’ proposal that “robots should also be taxed” in an interview he gave to the Quartz news site in 2017.^[15] Apart from this, the necessity of paying the social security premium for robots is another matter of discussion (Worstall 2016). At the same time, it is recommended to put in place a “Universal Basic Income” in order to prevent the population from being unemployed due to the development of robots. Universal Basic Income prac­tice means every citizen of a country receives a certain amount of monthly wage that they can use to meet their basic needs (Riley 2017). However, it is important to keep track of the monthly income provided to the people or to ensure that people who are likely to be unemployed maintain their lives with this wage at a minimum level. For this reason, the robot tax application is also discussed for financing the income transfer to the unemployed.

Before evaluating the necessity/justification of robot tax, it is necessary to remember the classical taxation understanding and taxation principles. Tax is the monetary amount received from real and legal persons, based on the right of sovereignty, as non-quid pro quo and on the basis of law, in order to meet the public expenditures of the state or organizations authorized by the state (Qakir et al.

There are certain principles that must be followed in order to avoid any mishaps when collecting the taxes. These principles can be broadly divided into two: the classical principles determined by Adam Smith and today’s modern taxation principles.

There are four classical taxation principles determined by Adam Smith: equality (fairness), certainty, convenience and efficiency (Ay 2014: 168-169). Apart from these four principles determined by Adam Smith, there are also principles accepted in today’s modern taxation understanding. These principles are principles of gener­ality, fairness, efficiency, legality, certainty, stability in tax, economic efficiency and flexibility (Bilici and Bilici 2011: 140-141).

In the 2000s, some changes were experienced due to technological development. The widespread use of electronic commerce has brought about structural changes in taxation. In addition, not being indifferent to technical developments, states have also developed applications such as e-government, e-finance and e-tax (Hepaksaz 2011: 1).

The developments in the Fourth Industrial Revolution and the widespread use of robot technology have brought up the issue of whether robots can be taxed.

As stated, Bill Gates came up with the idea of collecting some kind of tax on robots considering too many robots employedin companies (Delaney 2017). In other words, companies will pay taxes and social security premiums for the robots they employ in their companies, and the state will be able to make human capital investments such as health support, retirement, social security and education for people with these taxes collected from companies. The basic logic of Gates in this regard is that a robot that can do the same job should be taxed in the same way as the human labour working in return for a certain wage in a company or factory and taxed at a certain rate.

The discussion on “Should the robots be taxed?” did not remain on the philosoph­ical or theoretical grounds and was carried to the European Parliament in 2017. In the draft text submitted to the European Parliament, it was stated that robots should be given identification numbers and classified as “electronic persons” in order to be subjected to social security premium payment, and the employers or owners of robots considered as electronic persons should be obliged to pay taxes. However, while saying yes to the robot law, the European Parliament rejected the robot tax by majority vote.^[16] Even if it was rejected by the European Parliament, the issue of the taxation of robots continues to be discussed by all parties.

First of all, in the classical economic system, production factors consist of labour, capital, natural resources and enterprise. Technology has also been added to these production factors in recent years. Tax is imposed on the income, wealth and expen­ditures obtained from these factors. In this sense, in the classical taxation approach, as mentioned above, there are taxes levied on expenditures, taxes levied on income and taxes levied on wealth.

If tax is collected from robots, this tax can be considered as taxation on income, because as for the taxes on income, the taxable event is the income of the person. In this sense, taxation can be made by assuming that the robots earn an income as a result of working in a factory or a company.

Another method of taxation might be quota application. The maximum amount of production that can be reached through human labour should be determined and it should be ensured that this amount is subject to a regular taxation for robots. For the portion exceeding this amount, taxation can be made from the upper tranche, similar to the progressive tariff.

Taxing the robots can be beneficial to ensure equality of competition between the company that employs robots and the company that does not. Apart from robot tax, mechanical security premiums, similar to social security premiums, can be collected from robots in order to cover costs such as breakdowns, replacement of parts and renewal and maintenance of robots. However, it should be ensured that mechanical security premiums are paid to a separate insurance institution to be established, similar to the social security institution, and spent for robots. However, it does not seem possible to establish and manage such an institution.

In terms of collecting robot taxes, as unconscious robots cannot be indirectly taxed, tax can be collected from those who employ the robots or their owners.

When the increase in production volume with robotization in production is deemed positive, not collecting any taxes from robots can be considered more logical, because more production means the use of robots as a tool to make the economic growth more possible. Taxation of robots can be an obstacle to further production. However, producing more is not a sufficient criterion alone for the growth of the economy. There must also be demand meeting that production. If demand is not sufficient, excess supply occurs and the economy may enter a recession period. Moreover, too many people may be unemployed as a result of the increase in robotization. Even within the scope of a “Universal Basic Income Practice”, it may not be possible for those people to create enough demand to meet the production of robots. For this reason, it is not very meaningful to think that it is efficient as production will increase and that no tax should be collected from robots.

At the same time, a company employing robots produces more than a company that does not employ robots, but, for the said overproduction, it also pays more tax and price for the raw materials, finished products, semi-finished products, spare parts, seeds, etc.

From two different angles of view, there are conditions that require taxation of robots, as well as negative consequences as a result of collecting such tax. Taxes on robots would be reasonable and logical if they were actually used for human capital, such as the care of the elderly and retirees, education of people, and to finance public expenditures that may arise from hiring of robots instead of humans, provided that it ensures fair competition. However, in the future, it is also possible that robots that can make robots emerge as a result of the development of technology. In such a situation, the labour trained with robot tax may not have a business line left to practise that training. Or for limited employment, only a small fraction of the large number of trained people may be hired. Although it may seem utopian, these are possible scenarios. For these reasons, it is thought that robots can imperil the jobs of not only blue-collar workers but also white-collar workers.

As Bill Gates suggests, the use of robot tax for human capital contradicts the prin­ciple of “tax is a non-quid pro quo payment”.^[17] Certain revenues cannot be allocated to some specific expenditures, as a tax must be non-quid pro quo payment. If it will be collected for this purpose, it should be taken under another revenue title (fund, etc.). If there will be a use in the form of robot tax, this revenue should be collected to be used in general public expenditures.

The involvement of robots in the economy can adversely affect the supply-demand balance. In such a case, the robot tax can be used as a balancing instrument to restore deteriorated economic balances. States can keep the robot market under control through regulatory and supervisory institutions that it will establish with the func­tion of “arbitrator state”. At the same time, public administrations may oblige that company to provide public service by taking a certain amount of goods as tax in kind, depending on the amount of goods produced by companies using robots, or compa­nies that use robots for more than certain working hours can have the robots used in public service in proportion to their working hours, considering their bodies as taxes.

As a result, it seems that robotization and robotic developments are a very new discussion topic. The theory of robotization and robot taxes is not yet grounded, but it is likely to develop in the near future. For this reason, it is not possible to certainly conclude that robots should or should not be taxed. However, when the issue regarding the taxation of robots is on the agenda, it is clear that comprehensive studies need to be carried out. It is expected that new legal arrangements will be made, a renewed understanding of taxation and taxation principles will be introduced, a suitable financial environment will be prepared, multifaceted regulations regarding the economy will be developed and a new generation of taxes will be allocated.

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