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South Korea's 'Robot Tax'

News, 10 August 2017
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SEOUL: As the debate over whether automation will lead to a wholesale loss of jobs for humans, the Moon Jae-in administration has proposed a reduction in financial incentives for companies adopting robots.

South Korea will limit tax incentives for investment in automated machines in the update to the countries tax laws which were set to expire at the end of this year, according to the Korea Times.

Under previous governments, tax deduction benefits were provided to businesses willing to invest in infrastructure. Overall, the policy was intended to boost productivity by allowing companies to have between 3% and 7% of their corporate tax deducted, depending on the size of the business.

The government has proposed lowering the tax deduction rate by up to two percentage points, when the new tax code comes into force at the end of this year.

 An industry source speaking to the paper explained, “though it is not about a direct tax on robots, it can be interpreted as a similar kind of policy considering that both involve the same issue of industrial automation."

As robotics advances as a field and the application of robots extends into typically human roles, governments will need extra funding for welfare as unemployment rises.

A notable advocate of a robot tax is Bill Gates who in February told Quartz that “there will be taxes that relate to automation.” The Microsoft founder believes that human displacement in the job market needs to be managed.

“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argued.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level,” Gates said.

However, others have been critical of such a tax, arguing that it will stifle innovation. In an article for the Financial Times, the former US Treasury Secretary wrote that it’s “hard to see why shrinking the pie rather than enlarging it as much as possible and then redistributing it, is the right way forward.”

Data sourced from the Korea Times, Quartz, Financial Times; additional content by WARC staff.

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