Analysts at Deutsche Bank have proposed a new 5% tax on individuals choosing to work from home, saying the money raised could be passed onto low-income individuals that can’t work from home.
Deutsche Bank says the move to tax individuals working from home at around 5% of their salary could raise USD $50 billion a year in the U.S., $23 billion in Germany and $9.3 billion in the UK.
The report states that those individuals choosing to work from home while their employers offer them a physical desk could be taxed at around 5% of their salary, and if a company does not offer a desk, the employer should pay the tax, instead.
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This is largely down to the fact that Deutsche Bank says that “remote workers are contributing less to the infrastructure of the economy whilst still receiving the benefits.”
Deutsche Bank says that self-employed and low-income employees should be excluded from the tax, and should only be applied in countries where there is no official government instruction for individuals to work from home.
Jim Reid, a research strategist with Deutsche Bank has said that “working from home will be part of the ‘new normal’ well after the pandemic has passed. We argue that remote workers should pay a tax for the privilege.”
Luke Templeman, another Deutsche Bank strategist says that “for years we have needed a tax on remote workers- COVID has just made it obvious.”
“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. The USD $48 billion raised could pay for a $1,500 grant to the 29 million workers who cannot work from home and earn under $30,000 a year,” he said.
“A work-from-home tax makes sense to support the mass of people who have been suddenly displaced by forces outside their control,” he said, adding that “from a personal and economic point of view, it makes sense that these people should be given a helping hand… those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them,” Templeman concluded.
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Deutsche Bank believes the 5% salary tax on individuals choosing to work from home will not have any impact on their bottom line, as they are already saving money on clothes, food and traveling to and from their employer’s office.
“People who can WFH – work from home – and disconnect themselves from face-to-face society have gained many benefits during the pandemic… a 5 per cent tax for each WFH day would leave the average person no worse off than if they worked in the office,” the report states.
According to a report from CNBC “the pandemic has seen 10 times more people in the U.S. working from home, at 56% of the workforce, while the U.K. has seen this figure rise seven-fold to 47%. A Deutsche Bank survey showed that more than half of workers internationally wanted to continue to work from home two to three days a week post-pandemic.”
We reported last week on a survey from the ACTU that claimed as many as 80% of Australian employees wanted to continue working from home, but were fearful of discrimination from their employer.
Our report quoted Jennifer Westacott, the Chief Executive of the Business Council of Australia who said there was a “mix view” on individuals choosing to work from home, and that the COVID-19 pandemic illuminated a number of “structural problems” with a huge number of Australians working from home.
“We’ve got to make sure we’re very careful about making huge assumptions that everyone will work from home and it’s good for everyone,” Westacott said, adding that working from home should be a choice that will involve changing current workplace and discrimination laws.