Back humans, tax robots!
That long-term perspective is one of the great strengths of family enterprise.
The recent increase in Employers’ National Insurance – which I warned would prove to be a tax on jobs – has only made that imbalance more pronounced. It raised the cost of employing people at precisely the
Large global companies may be able to replace thousands of roles with AI while banking the gains across international operations. Family businesses are more likely to adopt AI in ways that support their people, helping employees become more productive rather than making them redundant. A tax system that rewards retaining and developing talent would reinforce that approach instead of putting it at a disadvantage. Britain has always succeeded by embracing innovation. We should continue to do so. But history also teaches us that periods of technological transformation require sensible public policy. The Industrial Revolution ultimately created greater prosperity because society adapted its institutions alongside new technology. AI deserves the same thoughtful approach. The design of a new “robot tax” will have to be carefully considered. We could implement transaction-based levies on AI services and automation – rather like VAT – or surcharges on businesses that replace human workers with machines.
moment when AI is becoming capable of performing many
administrative and routine tasks. If we want work to remain at the heart of a successful economy and society, we should not make human employment the more expensive option. Instead, we should look at whether AI-driven productivity gains could help fund lower taxes on jobs. Imagine using revenue from an AI levy to reverse the increase in Employers’ National Insurance. Businesses would still be encouraged to innovate and invest in technology, but they would no longer face a tax penalty for choosing to employ people. That would create a healthier balance between technological progress and human opportunity.
James Reed Chairman and CEO of Reed
Artificial intelligence is no longer a future possibility. It is becoming part of everyday business, changing how we recruit, serve customers, manage operations and make decisions. Used well, it has enormous potential. Used badly, and with the wrong policies in place, it risks creating a tax system that rewards replacing people while making it more expensive to employ them. That is why I believe we should back humans and tax robots. This is not an argument against AI. Quite the opposite. Every business should be thinking about how technology can make it more productive. AI can help people work better, eliminate repetitive tasks and unlock growth. The businesses that try to ignore it will almost certainly struggle to compete. The question is whether our tax system keeps pace with the changes we are seeing. At present, employers pay significant taxes when they hire people. Yet if they invest in AI that enables them to reduce headcount, there is no equivalent contribution. As technology improves, that creates a powerful financial incentive to automate jobs wherever possible, regardless of the wider consequences.
For family businesses, this matters especially.
Unlike many multinational corporations, family firms are often rooted in their communities. Their employees are not simply numbers on a spreadsheet; they are neighbours, friends and, in many cases, members of the same family. Decisions are frequently made with the next generation in mind rather than the next quarter’s results.
But the principle is simple: taxation has always followed where wealth is
FBUK Issue 8 12
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