Robot sitting in an office

South Korea considers amending tax laws to slow speed of automation

Image credit: Dreamstime

Amid concerns that automation could lead to a rapid growth in unemployment, South Korea is considering adjusting its tax laws to reduce incentives for companies to adopt machinery.

South Korea is the world’s most heavily automated country, with more than one robot per 19 employees in the country’s high-tech manufacturing sector.

The revision to South Korea’s taxation laws would limit tax incentives for companies investing in automation. Previously, a seven per cent deduction in corporate tax was introduced to boost productivity. A cut of up to two per cent in this deduction is under consideration.

The country’s current tax laws are due to expire at the end of 2017.

Although this is not a robot tax, rather a partial withdrawal of incentives to automate, an industry source told the Korea Times that “it can be interpreted as a similar kind of policy [as a robot tax], considering that both involve the same issue of industrial automation”.

The cut in corporate tax deduction could make up for lost income taxes, as workers are slowly replaced by machinery, and could raise some cash for welfare, ahead of a predicted growth in unemployment, the Korea Times reported.

Around the developed world, there are widespread concerns that robots could replace human workers, not just in low-skilled jobs but in professions such as human resources and finance. According to analysis by PwC, machinery and artificial intelligence could gradually replace a third of existing British jobs by 2030.

Bill Gates is among those who has proposed a tax on robots in order to manage the pace of change, as more and more traditional jobs are lost to automation.

In an interview with Quartz, Gates said that, just as a human worker generating income pays income tax and social security tax, a robot doing the same job should be taxed similarly. This would, he argued, “free up labour”.

“Let’s do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs,” he said. “You know, all of those things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.”

Previously, a proposal had been made to the European Parliament by Luxembourg MEP Mady Delvaux-Stehres to the European Commission to introduce a robot tax, among other regulations relating to robots in the workplace. The “robot tax” was firmly rejected by a vote in June 2016. Critics – particularly those in the robotics industry – argue that such a tax could prevent innovation.

“The IFR believes that the idea to introduce a robot tax would have had a very negative impact on competitiveness and employment,” the International Federation of Robotics said in a statement at the time.

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