A study from Deutsche Bank has proposed that employees working from home after the pandemic should pay a 5% “privilege tax” to support the income lost by lower-earners due to the coronavirus pandemic. The privilege tax will support workers who cannot work remotely from home.
Thematic strategist at Deutsche Bank, Luke Templeman, in the report released by the investment bank and published on Tuesday, said that although such a tax on remote workers has been required over the years, the pandemic has highlighted the need for its urgent implementation.
For remote workers, they get to avoid costs such as traveling expenses, clothes and laundry services, lunch, and entertainment bills at their workplace. This means that remote workers contributed nothing to the economy while enjoying the benefits of the economy offered by those who gave their bits.
Therefore, to aid those who had been displaced by the pandemic and ensure a smooth transition, Templeton proposed a scenario where remote workers get to pay taxes after the pandemic.
Templeton explained that the global economy and its appurtenances were not established to cope with remote workers. He added that it had taken centuries to set up the present global economic infrastructure, which supported employees being physically present at their workplace. He said that system was slowly being torn down by employees moving away from the physical workplace to a virtual one.
In a survey that the investment bank conducted, it found that more employees from around the world wanted to continue working from home at least two to three days a week after the pandemic is over.
Templeton said that remote workers pulled in more than average incomes generally and that when such a tax policy is implemented, neither the companies nor the remote workers would be significantly affected.
In the United States, the workforce working from home is pegged at 56%, while in the United Kingdom, that figure stands at 47%. Templeton argued that if a 5% tax is applied to the average remote worker in the US, about $48 billion a year could be raised by the tax authorities. These funds could be used to offset $1,500 grants for 29 million workers who cannot work from home and whose income was less than $30,000 a year.
In the UK, a privilege tax on remote workers could raise £6 billion, which can pay for a £2,000 grant to about 12% of workers aged over 25 and working for minimum wage.
In Germany, the tax could raise €15 billion, pay for a €1,500 grant for 12% of workers at minimum wage.
Templeton clarified that the tax should be paid by remote workers whose work from home was not by government recommendation. He said that the safe-employed or those on low incomes should be exempted from the tax. For workers who work remotely because their employers cannot offer them a permanent desk at the office, such employers should be made to bear the cost of the tax, Templeton added.