People working from home should be taxed to help fund lower income workers, economists say

People working from home should be taxed to help fund workers whose jobs are under threat, a new report has said.

Economists from Deutsche Bank have suggested a tax of 5 percent of a worker’s salary is introduced if they choose to work from home.

This tax would be paid for directly by employers with the income generated distributed to people who are unable to do their jobs from home, such as nurses and factory workers, for example.

The report argues that people working from home are saving money and not paying into the system like those who are leaving their homes to work, an imbalance that it says has been made clear during the coronavirus pandemic. 

Economists have said that there is an imbalance between those working from home and those still required to leave for their work - something that could be redressed by a tax on those who decide to continue working from home. Pictured: A woman works from home (stock image)

Economists have said that there is an imbalance between those working from home and those still required to leave for their work - something that could be redressed by a tax on those who decide to continue working from home. Pictured: A woman works from home (stock image)

Economists have said that there is an imbalance between those working from home and those still required to leave for their work – something that could be redressed by a tax on those who decide to continue working from home. Pictured: A woman works from home (stock image)

‘Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced,’ the report says, according to the BBC.

If introduced in the UK, Deutsche Bank has calculated that the proposed tax would bring in £6.9 billion a year.

This pot of money could then be used to pay out grants of £2,000 a year to low-income workers and those who are at risk of being made redundant. 

Using the US as another example, the report says that the tax could earn $48bn (£36bn), and help to redress the balance between the two groups.

‘For years we have needed a tax on remote workers,’ wrote Deutsche Bank strategist and report author Luke Templeman. ‘Covid has just made it obvious.’

‘Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.’

Deutsche Bank Research predicts that in total, US workers will now spend 4.6 billion days a year at home rather than in offices.

In the US, a 5 percent work-from-home (WFM) tax on an average $55,000 salary works out at around $10 a day.

For UK workers, a 5 percent tax on an average salary of £35,000 equates to roughly £7 per day.

As employers closed offices due to the Covid-19 pandemic, millions of people have begun working from home.

The number of people working in the office is unlikely to ever return to pre-pandemic levels, with many large employers saying they will allow some staff to permanently work from home – either full-time or part-time – after the pandemic.

Those working at home are experiencing money saving benefits by not paying for expenses such as travel, lunch, clothes and cleaning, while still benefiting from the infrastructure of the economy, Templeman argued.

The report by Deutsche Bank (offices pictured in Frankfurt) suggests that a 5 percent tax is placed on those who continue to work from home. The income generated by the tax would then go towards helping lower-income workers who are still required to go in for work

The report by Deutsche Bank (offices pictured in Frankfurt) suggests that a 5 percent tax is placed on those who continue to work from home. The income generated by the tax would then go towards helping lower-income workers who are still required to go in for work

The report by Deutsche Bank (offices pictured in Frankfurt) suggests that a 5 percent tax is placed on those who continue to work from home. The income generated by the tax would then go towards helping lower-income workers who are still required to go in for work

For the millions who cannot work from home however, this benefit is not being seen, and the tax should go towards helping these roles.

‘The virus has benefited those who can do their jobs virtually, such as bank analysts, and threatened the livelihoods or health of those who can’t,’ added Mr Templeman.  

The 5 percent tax, he said, ‘will leave them no worse off than if they had chosen to go into the office.’

Research from the bank found that one third of people want to continue working two days a week from home once the pandemic is over, which would still leave a gap in the economy when compared with pre-pandemic spending.

Under Deutsche Bank’s proposals, the tax would be paid for by employers who choose to let employees work from home, but it would not apply to those who are self employed or on low incomes.

The tax would also not apply to anyone asked to stay at home for a public health emergency or other medical reasons.

Revenues generated by the tax would be used for a very specific purpose, the report says – to provide grants to the millions of workers who are unable to work from home and who earn less than $30,000 a year.

The bank says its research is designed to encourage debate around a series of important topics, with Templeman saying he has already received a lot of feedback on the report.

‘A lot of people aren’t impressed at the idea of another tax, however, some have seen it as an interesting policy that governments can use to redistribute some of the gains from the pandemic which have been unexpectedly accrued by some people while others have lost out.’ 

Earlier this month, Deutsche Bank returned its non-essential staff at its London offices (pictured) to home working. The report's author has argued that the tax would not leave those working from home worse off than if they had chosen to go into the office

Earlier this month, Deutsche Bank returned its non-essential staff at its London offices (pictured) to home working. The report's author has argued that the tax would not leave those working from home worse off than if they had chosen to go into the office

Earlier this month, Deutsche Bank returned its non-essential staff at its London offices (pictured) to home working. The report’s author has argued that the tax would not leave those working from home worse off than if they had chosen to go into the office

At the start of November, Deutsche Bank returned non-essential staff at its London offices to home working ahead of the introduction of a second coronavirus lockdown in England on November 5. 

Many other business in the UK have done the same after a brief period of offices reopening at reduced capacity, with social distancing measures in place.

The move follows official government guidelines in the country under the latest coronavirus measures that state ‘[workers] must work from home if you can effectively do so.

‘If you cannot work from home, you can go to work but your employer must make arrangements for you to work safely.’ 

As recently as August, people in the UK were being encouraged to return to the workplace by the government, with business leaders warning of damage being done to city centres as workers stayed away.

Last month, a study of 1,000 businesses by the Institute of Directors (IoD) found that 74 percent planned on maintaining increases levels of working from home.

More than half planned on reducing their long-term use of workplaces.

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