The populist wave turning democratic politics inside out throughout the developed West has many drivers; voter paranoia over migration and terrorism is only the obvious one.
Arguably, a bigger factor is the way globalization and the spread of automation have been eliminating many forms of work. Several solutions have been proposed, from the controversial (protectionism) to the novel (a guaranteed annual income). Bill Gates is now getting people to talk about taxing robots.
“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed,” the philanthropist and tech mogul said in a recent interview. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at the same level.”
What Gates proposes is to use the revenue from a robot tax to invest in employee re-training, to speed up the painful adjustment from one form of economy to another. What he fears is a neo-Luddite revolt against automation and new technologies in developed nations. He’s not wrong to worry about it; economists recently told the U.S. Congress that workers earning less than $20 an hour have an 83 per cent chance of losing their jobs to machines.
But how would a robot tax work? Would it work?
Nine years ago, the government of Prime Minister Stephen Harper was faced with a thorny public relations problem. Vancouver-based MacDonald, Dettwiler and Associates wanted to sell its space division — maker of the Canadarm, the Dextre space station robot and the Radarsat-2 satellite — to a U.S. firm for $1.3 billion.
Critics ripped the deal as a sell-out of Canadian technological sovereignty. Stung by the blowback, the Harper government blocked the sale, using the only tool it had at the time: the “net benefit” test in the Investment Canada Act, the federal law that allows the government to review foreign investment. Net benefit is a blunt instrument; the threshold for review is quite specific and limited by the value of the proposed investment and by where the foreign investor comes from (WTO nations get a higher threshold). A year later, the government amended the ICA to add a second hurdle for foreign investment: a national security test.
When Canadian-American tech mogul Elon Musk stood before an International Astronautical Congress audience in Mexico in September to roll out a wildly ambitious plan to start ferrying human settlers to Mars over the next decade or so, online comment boards instantly lit up with armchair engineers arguing over whether the plan could actually work.
The tiny international community of specialists in space law, on the other hand, zeroed in on a different question – whether what Musk was planning would be legal.
Sounds academic, right? It’s not – not any more. Fifty years after the United Nations General Assembly adopted the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space – better known as the ‘Outer Space Treaty’ – private enterprise has started pushing forward into the vacuum left by the slow collapse of government-sponsored manned space exploration following the end of the Cold War. Musk’s grand vision notwithstanding, private enterprise’s interest in space is commercial, not scientific: There are vast sums of money to be made up there – from mining, power generation and tourism, for starters – and no shortage of entrepreneurs looking to plant their flag in extraterrestrial soil.
“Taxes,” said the great American jurist Oliver Wendell Holmes Jr., “are what we pay for civilized society.” Paying what you owe is a basic act of citizenship — but in every national culture with ties to Westminster, there has long been tension between a government’s right to collect tax and a citizen’s right to pay as little as (legally) possible.
In Commonwealth countries like Canada, the legal status of tax avoidance took root in the 1936 Duke of Westminster ruling: “Every man is entitled, if he can, to order his affairs so that the tax … is less than it otherwise would be.” Minimizing taxation is part of Canada’s legal tradition. But politics is starting to confront tradition.
The public image of the international financial services sector is in a slump. Starting with the 2007-08 financial crisis and intensifying with the release of the Panama Papers this past spring, a hostile political climate driven by stories of wealthy individuals and corporations paying very little tax has been pushing many governments to act. So when the multinational accounting firm KPMG made news last year with a tax-avoidance program based in the Isle of Man — one that, according to the CBC, the Canada Revenue Agency itself described as a “sham” meant to deceive government auditors — Canadian politicians were already feeling the pressure to make high-profile gestures against those seen to be flouting the spirit of the law.
Every lawyer working in the immigration field has a story to tell about the Temporary Foreign Worker program and the Labour Market Impact Assessment system. Few seem to end happily.
“I represented a medical clinic,” says Barbara Jo Caruso, co-founder of the Toronto-based Corporate Immigration law firm. The clinic had a specialist — an immigrant — employed on a work permit. The clinic’s owner-operator wanted to keep him, so he applied for a Labour Market Impact Assessment — the federal government’s tool for ensuring qualified Canadians get first crack at any job openings.
The owner-operator, says Caruso, jumped every hurdle in the application process, but mistakenly left some minor pieces of information off the job ad posted on his website — a tiny error that caused his entire application to be turned down.
“So this professional’s work permit expired, his patients had to go and find another clinic and his employer had to re-advertise everything,” says Caruso. “The employer was audited. He lost seven months. He lost patients, his patients lost the services of a professional they’d grown to depend on.”