A new report from Deutsche Bank argues for a new tax on working from home to help low-income workers affected by the pandemic who cannot work from home.
Economists at Deutsche Bank are proposing that employers pay an extra 5% tax on the salaries of staff who work remotely to help support low-income workers whose jobs are under threat.
In a briefing published this week strategist Luke Templeman from Deutsche Bank argues that the tax is fair as those who work from home are saving money and not paying into the system like those who go out to work. By working from home, people aren’t paying for public transport or eating out at restaurants near their places of work, he says.
Deutsche Bank says the need has grown due to the impact of Covid, with many people now working from home and likely to continue to do so in the future. It says that the economy depends on the businesses linked to commuting and that doing nothing would extend the economic fall-out from Covid.
While Templeman says there are costs to working from home, such as – during Covid – working with children around – it says these are outweighed by the benefits to workers, which include direct financial savings on expenses such as travel, lunch, clothes and cleaning and indirect savings associated with less socialising and other expenses that would have been incurred had a worker been in the office. He adds that there are also “intangible benefits” including “greater job security, convenience and flexibility” and “additional safety”.
He says the tax would only apply outside the times when the government advises people to work from home and would exclude the self-employed and those on low incomes. It would be paid by the employer if it does not provide a worker with a permanent desk. If the employee has a desk and chooses to work from home – full or part time – they would pay the tax. Those working from home, he says, would be no worse off than if they went to the office.
In the UK, Deutsche Bank calculates the tax would generate a pot of £6.9bn a year, which could pay out tapered grants of £2,000 a year to adult workers over 25 on the minimum wage and those under threat of redundancy. It would help them to shift to the new hybrid economy, retrain and would take into account the added risk they have taken during the pandemic.
“For years we have needed a tax on remote workers,” says Templeman. “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.”
He adds: “The sudden shift to WFH means that, for the first time in history, a big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life. That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.”