Privilege Tax For Work From Home

Last Updated on January 24, 2023

The year 2020, is turning out to be very shocking for the world. It started with a shocking spread of the COVID-19 pandemic, Stock market crash, global recession, lockdown, war, work-from-home, election and economic reforms.

One of the new terminology come into existence i.e. Privilege tax. With the rise of work-from-home trend, the governments was on the way to introduce new taxation method to get benefit out of this growing new work trend.

Privilege Tax Meaning

The term privilege means a special right or benefit which is provided or reap by an individual, group, class, or caste. While tax is a charge that is a statutory charge which is being imposed upon the persons who falls in the category of taxpayers.

Thus, privilege tax is a charge which is going to be imposed upon the persons who have the special benefit of performing work from their homes.

It all started with the research report published by Deutsche Bank “What we must do to rebuild”. In this report, they present their ideology on how economies of the world can be reshaped from the havoc, created with the global pandemic distribution.

The report discusses various topics to reform the world like green finance, promote digital currencies, the fundamental right to connectivity, and work from home tax.

The editor of the report said:

“People who are working from home and disconnect themselves from facing society have gained many benefits from the global pandemic. A 5% tax should be imposed on those who work from home.

This taxation could raise $49 billion per year in the US, €20 billion in Germany, and £7 billion in the UK. This fund can be used to provide subsidies to the lowest wage workers, who do not get the privilege of working from home.”

The work from home concept started to increase before the spread of COVID-19 pandemic. The pandemic just worked as a catalyst to make this concept grow. According, to a report during this time period, the work from home population in the United States was increased 10 times to 56% and in the United Kingdom 7 times to 47%.

Employees with a work from home facility have an advantage over a blue-collar worker who works in the factory, shopkeepers, municipal clerks, drivers, and hospital staff who cannot reap work from home benefit. They also save money used to commute to the office or expenses made to grow interpersonal connections.

On the contrary, working from home have its own disadvantages like an increase in mental pressure due to personal and work life collide together, the responsibility of taking care of children along with office work, connectivity issues, infrastructure expenses, and so on.

” Work From Home offers direct financial savings on expenses such as travel, lunch, clothes, and cleaning. Adding to these the indirect savings via forgone socializing and other expenses that would have been incurred if worked in the office.

Then there are the intangible benefits of working from homes, such as greater job security, convenience, and flexibility. There is also the benefit of additional safety.”

Should work from home is considered a privilege, and should a privilege tax be imposed?

In the context of the COVID-19 pandemic surely work from home is a great benefit. The employee who is working from home gets a secure environment and safe from the virus exposure. Can spend more time with family and use his/her free time from working hours in productive use.

Meanwhile, the employee or worker who did not get this benefit is highly exposed to pandemic and in some cases, he/she has to live separately from his family. Most of the time utilize in commuting and in the worst case, he/she has to lost his job because of layoff.

Why did Deutsche Bank suggest a privilege tax for work from home employees?

The research report represents survey figures that the majority of the people who participate in the survey stated that they want to permanently continue working from home or 2-3 days a week post-pandemic.

Deutsche Bank report also argues that:

“remote workers are contributing less to the infrastructure of the economy, whilst still receiving its benefits.”

The gains are more than the cost of work from home. The report suggested that a privilege tax should be paid by the employer and those employees who have permanent desk jobs that choose to work from home. They should pay privilege tax out of their salary.

The proposal to imposed privilege tax is put upfront. In the end, it’s up to the government and the economists to think over. Should in the next year, there will be introduction of a new work from home tax. The outcome is unknown.

Read full report from here.