Inclusive Growth in the Era of Automation and AI: How Can Taxation Help?

Abstract

In the last decades, the world economy is facing a massive rise in automation, robotics and Artificial Intelligence (AI) which, according to some analysts, could lead to significant job losses or job polarization and hence widen income and wealth disparities. This scenario may impede the achievement of the Sustainable Development Goal 8 (SDG 8). In this context, the role of government and regulation becomes crucial in order to prevent an undesirable scenario, where technological change, namely automation and AI, comes at the cost of mass unemployment and growing inequality. This paper focuses on the role of taxation as a possible tool for sharing the gains from automation and AI. Nowadays, advances in technology may have a direct impact on tax systems, which should be re-adapted to take into account new forms of jobs and new business models. The paper discusses pros and cons of several possible solutions and then compares progresses achieved in different countries. Concerning robot tax and digital taxes there are already some concrete steps undertaken both at national and international level, while other proposals remain still nebulous. Of course, taxation per se, and any single policy in general, is not sufficient to achieve a more inclusive and equal growth. It is instead crucial to create synergies across policies and a strong link between employment creation strategies, redistributive policies, skill development and social protection systems.