Economist proposes tax on home working

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Employers should pay an additional tax of 5% of a worker’s salary if they choose to let staff work from home, an economist has suggested.

According to Deutsche Bank’s Konzept #19: What we must do to rebuild report, additional taxes should be levied to help support workers in jobs that are under threat, with the income generated used to fund pay increases for people who cannot work from home.

In the report, Deutsche Bank strategist Luke Templeman argues that people who work from home are saving money and are not contributing as much into the wider economy as those who need to go out to work, who use public transport or eat out near their places of work, for example.

He says there had been a sevenfold increase in the number of people working at home in the UK between 2005 and 2018.

He estimates that by levying a 5% tax – which would be paid for by employers, unless an employee themselves chooses to work from home – some £6.9bn in additional public funds would be generated, which could be paid to low income workers and those under threat of redundancy in the form of annual £2,000 grants.

The report says: “For years we have needed a tax on remote workers. Covid has just made it obvious.

“Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced.”

He said Covid-19 and the restrictions that had been put in place to reduce the spread of infection had “threatened the health and livelihoods” of those who cannot work from home while those who can do their jobs virtually have “benefitted” from the virus by spending less on travel, lunch, clothes and cleaning.

Research from Deutsche Bank shows that one third of people want to continue working at home for at least two days a week once the pandemic is over, and Templeman said a 5% tax – which would not apply if government advise remote working – would “leave them no worse off than if they had chosen to go into the office”.

“The tax itself will be paid by the employer if it does not provide a worker with a permanent desk. If it does, and the staff member chooses to work from home, the employee will pay the tax out of their salary for each day they work from home. This can be audited by coordinating with company travel and technology systems,” Templeman says in the report.