Home workers should pay more tax for the privilege, Deutsche Bank says

Plenty of people have discovered the advantages to working from home during the coronavirus pandemic. Indeed, many are now reluctant to go back - prompting researchers from Deutsche Bank to suggest that home workers ought to be taxed for the privilege, with the proceeds used to support lower-paid workers. 

Employees should pay a 5 percent tax, Deutsche Bank argues

Researchers at Deutsche Bank have proposed that in future employees should have to pay a tax of 5 percent of their salary for each day they work remotely. They argue that the change would not leave the average employee any worse off, if savings made on transport, on-the-go breakfasts and lunches, and work clothing are taken into account. The report also suggests that the tax could be paid by employers.

“Those who can work from home receive direct and indirect financial benefits and should be taxed to make the transition smoother for those who have suddenly been displaced,” writes strategist Luke Templeman. “For years, we have needed a tax on remote workers. Coronavirus has just made it obvious.” The German bank argues that the tax could earn 48 billion dollars if introduced in the US and 16 billion euros in Germany. 

The coronavirus pandemic has “turbocharged” the popularity of remote working, Templeman said. Many big employers have now pledged to allow employees to work from home permanently, either part-time or full-time, even after the pandemic is over. A FAZ survey found that more than half of all workers who have been working from home now wish to continue to do so, at least part time. 

Tax could support key workers who cannot work remotely

However, Deutsche Bank argues that there are millions more workers who cannot work from home - including doctors, nurses and factory workers. The tax would help to support these roles. “The virus has benefited those who can do their jobs virtually… and threatened the livelihoods or health of those who can’t,” said Templeman, adding that remote workers contribute less to the economy “whilst still receiving its benefits.”

“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 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.” 

In Germany, the tax revenue could finance a premium of 1.500 euros each for the 12 percent of the population with the lowest incomes. The new tax could also support people who have lost their jobs or been forced to take on lower-paid roles while they retrain.