Higher Taxes for Home Working: New 5% tax for remote workers proposed

December 10, 2020

3 min read

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What's going on here?

Employees who continue to work remotely after the pandemic should pay more tax in order to support the poor and disadvantaged workers in society. That is the proposal detailed in Deutsche Bank’s new “Rebuild” report – the bank’s roadmap to a post-Covid recovery.

What does this mean?

It is widely accepted that new taxes will be introduced to rebalance the mammoth government spending during the pandemic. Deutsche Bank is suggesting that this tax clawback starts with remote workers, proposing a 5% daily tax levy on annual salaries to pay for the “privilege” of working from home.

According to Luke Templeman, strategist at Deutsche Bank, these resource-hungry workers don’t contribute their share to society but utilise all the services available. Whilst poorer workers, whose jobs make it impossible to work from home, or who do not have the resources to work remotely, take up the slack. At face value, this may ring true but as anyone who is working remotely can attest, it is not all upside.

The benefits of remote working are obvious – no daily commute or need for the obligatory lunchtime sustenance. No costly new office attire or beauty regimens. However, working from home is not free. There are extra utility costs, the setting up of home offices, and other annual running costs that continue regardless of location. Furthermore, the pandemic has taught us that there are emotional costs to remote working. The loss of connection, face-to-face contact and general self-worth can take a great mental and physical toll. On reflection, remote working might not be such a privilege after all.   

What's the big picture effect?

The pandemic has seen almost 50% of the UK’s working population forced to work from home. Leaps in technology have made this possible and it is likely that it will be a long-term option for many employees. There is however an undisclosed motive in companies that are encouraging long-term work from home – which comes down to costs saved by business on smaller offices, cheaper locations and lower administrative costs. Thanks to the pandemic, businesses know now that despite their workforce being spread far and wide, the work gets done regardless.

Many may argue that those working from home are an easy target for a new tax measure. Others may laud the proposal as a “Robin Hood” policy, forcing a redistribution away from the privileged. If taken under advisement, this proposal would likely emerge with a rationale that is a hybrid of these ideas. But as any government who contemplates introducing a new tax will know, people will only accept them if the rules for selection are just and it is evident that people are paying their fair share.

The fact that this proposal originated at Deutsche Bank ought not to be forgotten. This mega-corporate has been beset by scandals in recent years. It may want to give the impression it has turned over a new “altruistic” leaf, but it’s background of million-dollar fines for alleged market irregularities tells a different story. It’s easy to be philanthropic when someone else is footing the bill.

It’s clear that the time for payback is imminent. Like it or not, the pandemic has given the taxman permission to come knocking on everybody’s door. But if history is anything to go by, he will be knocking a lot harder on some people’s doors than on others…

Report written by Denise Atwell

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