Employees who continue working from home after the pandemic should be taxed for the privilege, with the proceeds used to help lower-paid workers, according to a new report.
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Economists at Deutsche Bank have proposed making staff pay a 5% tax for each day they choose to work remotely. They argue it would leave the average employee no worse off because of savings made by not commuting and not buying lunch on-the-go and fewer purchases of work clothing. Alternatively, the report suggests the tax could be paid by employers who do not provide their workforce with a permanent desk.
The report from the German lender’s economic research unit has calculated that such a tax could raise $49bn (£37bn) a year in the United States, €20bn (£17.8bn) in Germany and £7bn in the UK. The money could be used to fund subsidies for lower-paid workers who are not able to carry out their jobs from home.
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“Working from home will be part of the ‘new normal’ well after the pandemic has passed,” said Jim Reid, global head of fundamental credit strategy and thematic research at Deutsche Bank. “Our calculations suggest the amounts raised could fund material income subsidies for low-income earners who are unable to work remotely and thus assume more ‘old economy’ and health risks,” Reid said.
Coronavirus has “turbocharged” the popularity of remote working, which was growing rapidly before the pandemic, according to Deutsche Bank strategist Luke Templeman. “For years we have needed a tax on remote workers – Covid has just made it obvious,” Templeman said.
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“A big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life. That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits. That is a big problem for the economy.”
A daily 5% working from home tax would cost an employee earning £35,000 just under £7 a day, according to Templeman’s calculations. He suggests the £6.9bn raised in the UK by taxing remote workers could provide a grant of £2,000 to the 12% of people aged over 25 who earn the minimum wage.
Under Deutsche Bank’s proposals, the new tax could also support people who have lost their jobs or been forced to take on lower-paid roles while they retrain.