Should the UK Government introduce a “Robot Tax”?

Sienna Woods

Artificial Intelligence is advancing at an unparalleled rate. Experts such as Geoffrey Hinton have warned that Artificial Intelligence could surpass human intelligence in the near future, which calls for greater regulation by the UK Government. One theoretical idea proposed is the ‘robot tax’ - a fiscal policy which taxes companies that are choosing to employ robots or automation over workers.

The primary aim is to reduce the existing economic and social costs associated with job displacement due to robots. An example of this issue in the UK is that large technology companies are replacing their human labour force with robots that do not pay income tax or national insurance contributions, which results in the decline of labour-based taxes as fewer people are employed. Consequently, the Government has less tax revenue and is less able to spend on resources for public goods such as education, healthcare and national defence, which could lead to a reduction in the standard of living in the UK.

Famous figures support such a tax, including Bill Gates, who believe that if human workers get taxed, robots should be too. Gates suggests using the revenue from a robot tax to fund education, training programmes and jobs that are unlikely to be replaced by AI.

Geoffrey Hinton, a Nobel Prize winner often referred to as the “Godfather of AI” due to his work on artificial neural networks, resigned from Google in 2023 partly due to age but also to more freely warn people about the dangers of AI. During an interview with the Financial Times, Hinton warned that as AI replaces workers - creating unemployment whilst increasing profits - it will make a ‘few people much richer and most people poorer’. Thus, widening the inequality divide between rich and poor. A robot tax could help redistribute wealth more evenly, supporting one of the UK Government’s wider macroeconomic objectives.

Another recent development that strengthens the case for greater AI regulation is the release of Anthropic’s new cybersecurity tool, Claude Mythos. Anthropic claims that Mythos has ‘already found thousands of high-severity vulnerabilities, including some in every major operating system and web browser’. The model can supposedly carry out advanced, multiple-step cyber-attacks in a substantially faster amount of time than humans (from days to minutes). Anthropic first released their tool to only 12 tech companies to give them a chance to identify vulnerabilities in their software and fix it before the tool is released worldwide. Many experts such as finance ministers, financiers and central bankers are concerned as this tool could easily be exploited by hackers and it could pose threats to the economy, public safety and national security. The uncertainty of this new technology reinforces the argument that leading countries in the AI revolution cannot solely trust private companies to police their own software. The unpredictable rate at which similar technology to Mythos will progress leads to an even greater need for robust regulation and policing of AI.

Additionally, the 2025 Reith Lectures titled Moral Revolution by Rutger Bregman, ‘explore the moral decay and un-seriousness of today’s elites’. Bregman highlights the importance of small groups of individuals who are entirely motivated and how they can spark moral revolutions. He draws parallels to groups of individuals in history who had a significant impact on the world, such as Thomas Clarkson, who was a key leader in the abolitionist movement to end slavery. Bregman is an advocate for more regulations on technology and AI. Perhaps we should follow suit in Bregman’s ‘Moral Revolution’ by introducing the robot tax, which could serve as a moral signal that technological advancement should not outweigh societal welfare or democratic stability. Many, including Bregman, believe that part of a solution could be to introduce a Universal Basic Income, which could be funded by a robot tax, to improve the overall standard of living.

Conversely, there are many arguments against a robot tax. Even labelling this policy as the ‘robot tax’ creates issues, due to the difficulty in defining the word ‘robot’ and therefore the difficulty in imposing the tax. If robots work alongside humans (‘Cobots’), should they be taxed? Critics argue that government resources would be better spent on public services rather than creating a new tax system that may be difficult to enforce. In the long run, the benefits of imposing a robot tax may not outweigh the drawbacks so it should not be introduced.

A major economic risk is that a robot tax may slow innovation, increasing opportunity costs. For example, it could discourage investment and have negative social impacts if there is less development of automation, such as robots used to assist surgery. Consequently, the growth of technology in sectors such as healthcare could be slower, thereby delaying life-saving advancements and lowering the standard of living.

Since the first Industrial Revolution, there have been major developments in automation such as the ‘Power Loom’ which have led to a prevalent increase in productivity and efficiency. Movements in the past, such as the Luddites, feared technology and automation due to the short run effects such as unemployment and the loss of skilled labour. In 1811, the Luddites violently protested by invading factories and setting the new textile machines on fire, but had they succeeded, the consequences would have been extremely damaging to society. Fortunately, in the long run it generated more wealth, provided higher skilled jobs and it allowed for shorter working weeks.

One of the major challenges is that without all countries on board, a country that introduces the robot tax may be disadvantaged. Firms could outsource their factors of production to countries without the tax, leading to reduced investment, exports and employment. Therefore, these countries will have reduced competitiveness, which slows economic growth and could ultimately lead to a decline in their standard of living. A robot tax would be damaging without international cooperation.

Whether or not the UK government introduces a robot tax, one thing is certain: AI developments are accelerating faster than our policies can keep up. I do not believe the UK Government should introduce a robot tax, especially without international cooperation. However, Artificial Intelligence should be regulated before it grows beyond our control.