A new report by Deutsche Bank has suggested that employees working from home after the pandemic should be taxed on their salary. This money would then be redistributed as grants to those who cannot work from home. 

The investment banking company, Deutsche Bank, has argued that employees who continue to work remotely after the pandemic should pay a 5 per cent tax on their salary.

The bank states that either this payment could be made by the employee who, as a result of working from home, does not have to pay commuting expenses and does not have to spend as much on lunches or work clothes. Deutche Bank said that this tax would leave employees “no worse off than if they had chosen to go into the office”.

It has also suggested that the employers could pay this tax as they save also money on providing staff with permanent desks when their employees work from home.

Research by Deutsche Bank suggests that a third of the workforce will work from home twice a week whilst almost a fifth (19 per cent) say they will be working remotely three times a week after the pandemic subsides.

However, the bank have further suggested that this money collected in tax should be given as one-time annual grants of £2000 to workers that cannot work from home and are on low income salaries.

In the UK alone, the bank predicts that this tax would raise around £6.9 billion a year in funds. For workers earning £35,000 annually, this tax would be equal to around £7 a year. The tax itself would be paid by employers who allow employees to work from home, excluding employees who have medical conditions that prohibit them from returning to the office. It would also not be applicable in public health emergencies such as the one seen this year.

Other employees who would be exempt from paying this tax would be those who are self-employed or on low income salaries.

Jim Reid, Global Head of Fundamental Credit Strategy and Thematic Research at Deutsche Bank, said:

Working from home will be part of the ‘new normal’ well after the pandemic has passed. 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.

Luke Templeman, Strategist at Deutsche Bank, said:

For years now, we have needed a tax on remote workers – COVID has just made it obvious.

A big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life. That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits. That is a big problem for the economy.

Many of these people are those who assumed the health risks of working during the pandemic and are far more ‘essential’ than their wage level suggests.

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.