Is Deutsche Bank right to call for a tax on working from home?

Before you grab your pitchforks and join an angry mob, we should at least consider the pros and cons of a 5 per cent tax for homeworkers, James Moore writes

Some argue the money raised should be used to help those disrupted out of jobs by the move from offices to homeworking (Getty)

Deutsche Bank proposing a 5 per cent tax on working from home?

Barely had I read the headline and there was coffee all over my desk. Haven’t these (expletive deleted) bankers inflicted enough pain? Apparently not.

“Those who can work from home receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced,” Luke Templeman provocatively declared in the latest edition of the bank’s Konzept publication, which is dedicated to post-pandemic rebuilding.

Clearly it’s time for a masked socially distanced mob of us homeworkers to descend on Deutsche’s London HQ en masse, pitchforks at the ready.

Trouble is, Templeman himself has been working from home, so he mightn’t be there to witness our outrage.

Perhaps the better course would be to take a closer look at his ideas, after first having fired up the espresso maker and made a fresh coffee with fancy beans from one of the specialist providers like Square Mile, or Union. Taking out a subscription with one or the other is much easier to contemplate if you’re not paying a fiver a go for something like a Starbucks pumpkin spiced latte every day.

This speaks to one of the points Templeman makes in his piece: there are benefits tangible and intangible to working from home. The most obvious of the tangible advantages would appear to be financial.

The proportion of people working from home before the pandemic struck was relatively small (5.4 per cent in the US for example) but growing fast (an internet fuelled 173 per cent stateside between 2005 and 2018).

As it has been with so many things, coronavirus delivered a shot of amphetamines to the numbers. Homeworking has risen ten-fold in the US (to 55 per cent) and seven-fold in the UK (to 47 per cent). A Deutsche survey found more than half of those affected want to carry on for at least two to three days a week when the Covid crisis is over.

The benefits to their personal finances go well beyond the ability to trade Starbucks for Square Mile. Transport costs are reduced. Making your own lunch is cheaper than buying it. A host of face to face transactions are eliminated.

The net benefits, Templeman argues, outweigh the costs, such as, say, spending more on energy or having to upgrade your broadband. He says they would still do so even where a 5 per cent tax imposed to help mitigate the social cost, namely the undermining of the vast economic infrastructure created to serve offices and office workers.

Many of the people working within that infrastructure are likely to be poorly paid. It should also be noted that some of them have taken considerable risks in turning up through the course of the pandemic. Homeworkers, by contrast, tend to be paid quite well.

Is it fair to suggest penalising female workers who take up home working for very good reasons when they’ve been disadvantaged for so many years?

This is where Templeman’s tax starts to look a lot less regressive. He argues that the proceeds should be used to provide a financial cushion – through grants – to people displaced from their jobs by the work from home revolution.

Make no mistake, that displacement is a real issue. But through Templeman’s charge, the City of London sandwich shop worker displaced by the Deutsche Bank analyst taking to homeworking would be afforded the funds to seek, or train for, other opportunities.

The tax would be levied on employers if they did not offer workers a permanent desk, or on workers if they had one available to them but took up the option of working from home, which could make it quite complicated to administer but we’ll park that for now.

There would be exemptions for the low-paid and for people who work from home as a result of medical issues or disability. I’m in the latter group, so I don’t (in theory) have a horse in this race. The self-employed would also be excluded.

Templeman has a message for people like him who aren’t in these groups. Those who “are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe a debt” to those left disadvantaged, even destitute, by their move.

He makes a good case but it’s not quite as clear cut as he suggests.

For example, more working from home helps to overcome one of the biggest issues facing modern Britons: how to secure quality child care at an affordable cost. This is something that holds back women, in particular, from fulfilling their potential which, as multiple analyses have shown, holds back the economy. It’s also a social injustice. Is it really fair to suggest penalising female workers who take up homeworking for very good reasons when they’ve been disadvantaged for so many years?

Another issue. Let’s say you can offer a receptionist, whose primary responsibility is call handling, the option of working from home for two or three days a week. They might end up paying the 5 per cent if they’re just above the wage threshold while their employer’s millionaire derivatives trader, whom regulators would much prefer to have in the office where they can be supervised, does not. That’s an unconscionable situation, even if you take into account the financial benefit to the receptionist through working from home.

Templeman is quite correct to state that we owe a helping hand to the hundreds of thousands of workers disrupted out of jobs through no fault of their own while the economy resets and adapts to the new home working arrangements that are emerging. He raises some important issues, and it’s a good debate to have.

But there’s a better way to raise funds to assist people caught in the storm of economic disruption than by levying a de facto poll tax on home working. It is through the operation of a properly progressive taxation system in which those who can afford to pay more do so.

We don’t really have that at the moment and it’s time this changed.