Shifting technology that relies more on robots than human workers could undermine your retirement finances, according to new research.
A study by academics at Oxford forecast that 35% of British jobs will go to robots over the next 15 to 20 years.
That’s good for business, says the report, but bad for those relying on revenues from income tax and national insurance to fund their state and public sector pensions.
Tax revenues will shrink unless more jobs for displaced human workers are created.
Future governments face some tough decisions to balance the books and maintain pension promises.
One possibility is to rethink the way taxes are raised.
History repeats itself
The Romans faced a similar dilemma. No income tax was raised and little would have been collected as at least one in four of the population were slaves with no income.
Instead, taxes were raised on property, investments and savings.
In modern times, Treasury mandarins are secretly hoping that as technology advances, the ranks of the self-employed will swell to cover the lost tax. That seems a vain hope, as half of all tax receipts derive from income tax and national insurance.
Official figures also show that although the numbers of self-employed have reached the highest level for 40 years, average incomes have plunged by almost a quarter since 2008.
This should set alarm bells ringing – more people on lower incomes means fewer taxes due.
Property owners bear tax burden
Those likely to bear the burden of future taxation are those with land and property.
The truth is taxing cash is difficult because money is easy to move and hide. Try hiding a two-bedroom terraced buy to let home – it’s not quite so easy.
Chancellor George Osborne has already started a tax grab against buy to let investors.
His recent tax changes include a stamp duty surcharge of 3% on the purchase of residential property for investment, reductions in mortgage interest tax relief for higher rate taxpayers and changes in claiming for wear-and-tear on furnishings.
For the rest, unless property taxes can replace those on income, there is some doubt whether the government can prop up the state pension. It’s possible those that don’t save for retirement will have no financial safety net in their old age.