MOWAT RESEARCH #167 | JULY 2018

Robots, Revenues & Responses Ontario and the Future of Work BY SUNIL JOHAL, JORDANN THIRGOOD & MICHAEL CRAWFORD URBAN WITH KIRAN ALWANI & MATI DUBROVINSKY Acknowledgements

The authors would like to thank those who participated in this research project as key informant interviewees, policy lab participants and critical reviewers. A special thanks to Peter Spiro, Erich Hartmann, Andrew Parkin and Reuven Shlozberg for their review and contributions, as well as Elaine Stam for her design work on this report.

The Mowat Centre would like to thank the Government of Ontario for commissioning and providing financial support for this report, as well as the Policy Innovation Hub (Cabinet Office) and Ministry of Finance for their helpful contributions. The content, conclusions and recommendations expressed in the report are the authors’ alone and do not necessarily reflect those of the Government of Ontario.

Authors

SUNIL JOHAL JORDANN THIRGOOD MICHAEL CRAWFORD Policy Director Policy Associate URBAN

Sunil Johal is Policy Director at the Mowat Since joining the Mowat Centre in 2015, Practice Lead — Government Centre. He is frequently invited to speak Jordann has led and contributed to a variety Transformation about the future of work, technology and of projects on intergovernmental policy Michael joined the Mowat Centre as a social policy at conferences in Canada and government transformation. Much of Policy Associate in January 2016 and took and abroad. He has contributed expert this research has focused on technological on the role of Practice Lead – Government commentary and advice on regulatory and innovation, the changing nature of work and Transformation in September 2017. He policy issues to a range of organizations access to the social safety net. Previously, brings a varied set of experiences to his and media outlets, including the G-20, World she worked in the financial sector and ran work at Mowat having worked at Global Economic Forum, Brookings Institution, The a pro bono policy consulting firm for non- Affairs Canada in Ottawa – most recently Globe and Mail, The Toronto Star, CBC Radio profit organizations in the GTA. Jordann as a Cadieux-Léger Fellow – with Elections and Television, CTV News, The Guardian, holds a Master of Public Policy degree from Canada and in the think-tank and NGO Maclean’s, The Ottawa Citizen, Policy Options, the University of Toronto, and an Honours sectors in Toronto and Ottawa. He holds TVO and the OECD. He holds degrees from degree in International Development Studies degrees from Queen’s University, Carleton the London School of Economics, Osgoode from the University of Guelph. University, and the University of Oxford. Hall Law School and the University of Western Ontario.

KIRAN ALWANI MATI DUBROVINSKY Policy Associate Economic Policy Analyst Kiran joined the Mowat Centre in October Mati holds an MA in Economics and a PhD 2017. She holds a Master of Public Policy in Business Economics from The University and Global Affairs degree from the University of British Columbia. He has held positions of British Columbia, and has worked in a in academia, with the Bank of Canada, the range of research and policy analysis roles, C.D. Howe Institute and the Government of including projects with the Asia Pacific Ontario. Throughout his career, Mati has Foundation of Canada, Canada-ASEAN worked on a wide range of economic issues, Business Council, and Conference Board of including: healthcare, urban development, Canada. monetary theory, financial services and payments.

MOWATCENTRE.CA @MOWATCENTRE 439 UNIVERSITY AVENUE The Mowat Centre is an independent public policy think tank SUITE 2200, TORONTO, ON located at the Munk School of Global Affairs and Public Policy at M5G 1Y8 CANADA the University of Toronto. The Mowat Centre is Ontario’s non-partisan, evidence-based voice on public policy. It undertakes collaborative applied policy research, proposes innovative research-driven recommendations, and engages in public dialogue on Canada’s most important national issues. ©2018 ISBN 978-1-77259-066-1 Contents

Executive Summary 1

1 Introduction 3

Setting the Stage 5 2 Demographic shifts 5 GDP growth and size of labour market 6 Wage growth and inequality 7 Changing nature of skills 8 Non-standard work and precarious work 9 Access to benefits 10 The underground economy 11

Technology and the Labour Market 13 3 Context 13 AI, robotics and automation 14 What factors will influence automation? 17 What types of jobs will be impacted? 18 Looking at the gig economy 21

Impacts on Workers and Canada’s Social Architecture 23 4 Employment insurance and training programs 23 Public pensions and health benefits 25 Other social supports 25

Potential Impacts on Ontario’s Revenue Base 27 5 Ontario’s revenue context 29 Threats to revenue 30

Understanding Plausible Futures Towards 2040 43 6 Plausible futures for Ontario’s labour market 43

Policy Options 59 7 Alternative revenue streams 61 Innovative partnerships with stakeholders 64 Service delivery modernization and policy resilience 70

8 Conclusion 72

ROBOTS, REVENUES AND RESPONSES jurisdictional arbitrage jurisdictional arbitrage and dataeconomies, the rise of the gig in the labour market, increased automation Trends such as tax base. erode the province’s already threatening to consolidation are and commercial of globalplatforms, operatinglargely beyond thereach ofCanadian taxauthorities,continue togrow. Ontario, thismeansupto $1.5billioninlostrevenue in2017–afigure thatcouldeasilyriseasahandful per centofglobalcorporate taxrevenues are lostasaresult ofprofit-shifting tolow-taxjurisdictions. For consolidation are eroding theprovince’s taxbase.Already, theOECDestimatesthat between 4and10 trends suchasincreased automationinthelabourmarket, theriseofgig economyandcommercial tax sources, withalmosthalfofthatamount comingfrom personalandcorporateincometaxes. But Ontario’s revenue baserelies heavily ontaxation.Two-thirds ofprovincial revenues derive from various integrity. the riseofprecarious workandincomeinequality willsurely present challengesforOntario’s revenue Even outsidesuchaconcerningscenario,pre-existing issuessuchas underground economicactivity, andtechnologicalchangeresultstrajectory inunprecedented claims beingmadeonitssocialsafety net. facing plungingtaxrevenues momentwhenanagingpopulationconsignsittoaslowgrowth atthevery strain. Indeed,withouttakingactiontoconfront thesources ofthisstrain,Ontariocouldfinditself corporations. Butinanincreasingly borderless world,thisapproach isshowingsignsofsignificant Like mostotherjurisdictions,Ontario’s taxsystemisbasedonresidency –forbothindividualsand effective inthe21stcentury. report concludesby setting outarangeofpolicyoptionsaimedatensuringthatourtaxsystemremains can respond tothelikely impactsthatthechangingnature ofworkwillhave onitstaxsystem.The provincial taxrevenues inthattimeperiod.Mostimportantly, itinitiatesaconversation abouthowOntario future trajectoriesforitover thenext20years anddiscussinghowavariety ofchanges mightimpact This report addresses thisquestionby assessing thestateofOntario’s labourmarket, exploringplausible tax baseandgovernments’ ability togeneraterevenue? respond tothesechanges–remains under-examined:Howwillthechangingnature ofworkimpactthe Yet, sofar, acriticalunderlyingquestion–andonethat willaffect howwellgovernments are ableto context ofthesedisruptive changeshave toappear. alsostarted more andlessrelevant continuetomultiply, andanalyses ofhowtomodernize inthe socialsupports new businessmodelsthey enable.Indeed,predictions ofthetypesjobsandskillsthatare becoming Much ofthefocustodatehasbeenonhowgovernments shouldrespond tothesetechnologiesandthe innovations like intelligenceandthesharingeconomywillreshape artificial ourlives andhowwework. Governments worldwideare tounderstand how grapplingwithdisruptive technologyandtrying EXECUTIVE SUMMARY

1 | THE MOWAT CENTRE 2 | ROBOTS, REVENUES AND RESPONSES Similarly, greater tocreate institutionsandcollaborative efforts dialoguewithpost-secondary aculture seekers are toopportunities twopriorityareas whichmay helpsmoothtransitionsinthelabourmarket. business andlabourtodeliver skillsdevelopment andtraininghowintermediariescanconnectjob an environment ofmore constrainedrevenues. For example,exploringhowgovernment canworkwith There are more thatcouldhelpdeliver arangeofpartnerships services effectively andefficientlyin use Ontario’s they willalsostrengthen socialsupports, ataxbaseheavily reliant onincometaxes. workers buildresilience and adaptabilitywillnotonlyhelpthemlive betterlives andreduce theirneedto takes inasefficientlypossible.Moreover, asthenature tohelp ofworkcontinues tochange,efforts changing nature ofwork.Butgovernment shouldalsoworktoensure thatitisusingtherevenues it Ensuring revenue ofOntario’s integritywillbeacriticalpart response totechnologicalchangeandthe totaxdatacollectionandusage » Assessingopportunities » Exploringpreferential taxtreatment forfirmsthatdevelop andcommercialize innovations, andthen » Collaboratingwiththefederal government onpotentialrevenue collectionissuesandsolutionsas » Negotiatingtaxcollectionandremittance agreements withdigitalplatforms (e.g.,forHST) » Investing inenhancedin-housedataanalyticscapacitytoidentifyunderground economyactivities include: Ontario cantake inthenear-termtobuildresilience, whichever scenarioendsupunfolding.These plausible futures forOntario.Nevertheless, even inthefaceofsuchuncertainty, there are actionsthat shape thefuture thatpolicymakers willface,somethingexplored by thisreport insketches offour over therateoftechnologicaladoption,andatwhichinstitutionalresponses willemerge, will How canOntario,andothersimilarlysituatedjurisdictions,adapttotheseglobaltrends? Uncertainty available, Ontariocanbegintoprotect itscitizens and itseconomy, whichever future isontheway. already underway, oftools examiningarange ofpotentialscenarios,andconsideringthefull battery governments asthey adaptexisting systemsofrevenue generation.But,by identifyingtrends thatare Technological disruptionwillchangethenature ofworkandpresent significantchallengesforall results andcost-savings. toshake-upoutcomes-based fundingcanalsoserve modelsandachieve stagnantdelivery bothbetter offers delivery service significantsavings whenimplementedproperly, andotherapproaches suchas For example,newtechnologies canhelptodetecttaxevasion aswellenableit.Similarly, digital Finally, thegovernment shouldalsoconsiderhowitcanusetechnologytoimprove itsownsystems. keep pacewithchangesinthelabour market. of lifelong learningcanhelpensure workers are abletocontinuallyacquire thenewskillsneededto declare theassociated revenues, inOntario they relate providers todigitalservice 1 » Summarizes theexisting literature on » Canvasses thecurrent stateofthelabour report: the lensofOntario,Canada’s largest province. The tounpacktheseissuesthroughThis report starts workandAI. world ofdigitaltransactions,virtual on residency –loserelevance inaborderless taxation andrevenue generation–basedprimarily face afiscalsqueeze astraditionalapproaches to years. Ontarioandmanyotherjurisdictionscould work islikely tolookdramaticallydifferent in20 technological advancements, meanstheworldof threats ofautomationandother andopportunities impact ofthesechallenges,whenaddedtothe and ariseinprecarious work.Thecombined slowing productivity growth, incomeinequality faced with challenges related to aging populations, Governments inadvanced economiesare already labour market mightbeforgovernment revenues. on effects ofthistechnologicaldisruption ofthe Less attentionhasbeenpaidtowhattheknock not toodistantfuture. intelligence (AI)androbotics willreplace humanworkers andwhichskillsmay becomeobsoleteinthe has focusedontechnologicaldisruption,whetherortowhatextenttechnologiessuchasartificial tanks andconsultingfirms,iscovered almostdailyby thepopularpress. Typically, thisattention three priorityareas for2018,isthesubjectoffrequent reports from internationalorganizations, think The future ofworkisatopmindissueforpolicymakers around theworld.ItisoneofG20’s automation in thelabourmarket andassesses in theprovince. ongoing trends thatwillshapethe future ofjobs in Ontarioaswellsome oftheimportant INTRODUCTION market academia, technology firmsandconsulting. including government, thenot-for-profit sector, representing abroad rangeofperspectives, March 2018thatbrought together40participants It alsointegratesinsights from apolicylabheldin and conversations withpolicymakers andexperts. environmental scanandanumberofinterviews This report isbasedon aliterature review, » Proposes policyoptionsthatcouldposition » Explores fourplausiblealternative futures for » Discussesthepotentialimplicationsof delivery modernization. delivery withstakeholders partnerships andservice alternative revenue streams, innovative trends begintoplay out,withafocuson Ontario forsuccessascurrent andpotential 2040. Ontario’s labour market in the years leading upto underground economy. income taxes, payroll taxes, salestaxes andthe province, withafocusoncorporateandpersonal technological disruptionsonthetaxbaseof Canada’s socialarchitecture forworkers. some ofthekey gapsandchallengesin

3 | THE MOWAT CENTRE Ontario and many other jurisdictions could face a fiscal squeeze as traditional approaches to taxation and revenue generation — based primarily on residency — lose relevance in a borderless world of digital transactions, virtual work and AI. 4 | ROBOTS, REVENUES AND RESPONSES REVENUES AND 4 | ROBOTS, 2 » Only13percentofthisgrowth will » From 2016to2040,Ontario’s for GDPgrowth andlabourmarket size. and immigrationare themainfactorsdrivingtheseshifts.Thesedemographicshiftshave implications Ontario’s populationwillcontinuetogrow incomingyears, butataslowerpace.Anagingpopulation Demographic shifts » Theunderground economy » Accesstobenefits » Non-standard workandprecarious work » Changingnature of skills » Wage growth andinequality » Gross DomesticProduct (GDP)growth andsize ofthelabourmarket » Demograph and describeshowthey are likely toevolve over thenext20years. Thesetrends andfeatures include: This sectionhighlightsthekey trends in,andfeatures of,Ontario’s economyandlabourmarket today, growth. of theprovince’s sustainedpopulation immigration representing the key driver come people. 2040, addinganadditional3.8million 14.0 millionin2016to17.8 population isprojected toincrease from in 2016to0.9percent2040.The slowing from 1.1percentannually continue, butatareduced pace– population growth isprojected to from naturalincrease, with ic shifts THE STAGE SETTING Ontario. Projections.” Source: of Finance. 2017.“Chapter I: Demographic Trends Ministry and (65+) x Highlights ofLong-Term Demographic Projections FIGURE 1 Measured asthe number of children aged 0–14 and seniors Total DependencyRatio Age Distribution(%)-65+ Age Distribution(%)-15–64 Age Distribution(%)-0–14 Previous Year Listed(%) Average AnnualGrowth from Population (000s) per 100 https://www.fin.gov.on.ca/en/economy/ltr/2017/ch1.html Measures Ontario’s Long-Term onthe Economy. Report people of core working age (15–64).

X Historical 2011 13,264 14.2 69.1 16.6 45 –

Historical 2016 13,983 16.4 67.8 15.9 1.1 48 Government of Government of

Projection 2040 17,802 15.0 25.2 59.8 0.9 67 .

5 | THE MOWAT CENTRE 6 | ROBOTS, REVENUES AND RESPONSES Government of Ontario. https://www.fin.gov.on.ca/en/economy/ltr/2017/ch2.html. Source: of Finance. 2017. “Chapter II: Economic Ministry Trends and Projections.” Highlights oftheLong-Term Projection:Base-CaseScenario—Average AnnualGrowth (Per Cent) FIGURE 2 » Ontario’s ofFinanceprojects Ministry that this decreased growth. population are themainfactorsresponsible for as slowgrowth ofthecore workingage(15-64) overall labourforce ratesaswell participation years, thisgrowth isslowingdown.Declining Ontario are bothprojected togrow incoming While GDPandthesize ofthelabourmarket in market size GDP growth andlabour » Thenumberofseniorslivinginthe of Ontario.https://www.fin.gov.on.ca/en/economy/ltr/2017/ch1.html. Projections.” ofFinance.2017.“Chapter I: DemographicTrends1 Ministry and Consumer PriceIndex Labour Productivity Employment Labour Force Real GDP Nominal GDP due toslowerlabourforce growth. that prevailed between1982and2015,primarily This islowerthanthe2.6percentgrowth rate rate of2.1percentbetween2016and2040. Ontario’s annualreal GDPwillgrow atanannual from 16.4percent in 2016. 25.2 per cent of the Ontario population in 2040, up 2.3 millionto4.5million.Seniorswill make up nearly doublebetween2016and2040–from Ontario’s Long-Term ontheEconomy. Report

1982–2015 (Average) Actual 1

5.3 2.9 1.2 1.4 1.4 2.6

Projection (Average) 2016–20 province Government Government 2.0 1.0 1.0 1.2 2.2 3.9

will Projection (Average) 2021–25 2.0 0.8 0.8 2.0 4.0 1.2 » Thenumberofemployed peopleintheprovince » Whilethelabourforce grew by anaverage of1.4 » RealGDPpercapitawillincrease by 29percent Ontario. https://www.fin.gov.on.ca/en/economy/ltr/2017/ch2.html. jections.” ofFinance.2017.“ChapterII:Economic2 Ministry Trends andPro

5.5 percentin2036-2040. decline from 7.7percentin2010-2015toabout The average unemployment rateisexpectedto 2010-2015 toabout8.5millionin2036-2040. is projected togrow from about6.8millionin per centbetween2021and2040. projected togrow atalowerannualrateof0.8 per centannuallybetween1982and2015,itis ($48,000). occurred between1981($32,000)and2015 50 percentgrowth inreal GDPpercapitathat (to $62,000)by 2040.Thisisslowerthanthe Projection (Average) 2026–30 Ontario’s Long-Term ontheEconomy. Report Ontario’s Long-Term onthe Economy. Report 2.0 0.8 0.8 2.0 4.0 1.2

Projection (Average) 2031–35 2.0 0.8 0.8 2.0 4.0 1.2

Projection (Average) 2036–40 2 2.0 0.8 0.8 2.0 4.0 1.2

Projection (Average) 2016–40 Government of 2.0 0.9 0.8 4.0 1.2 2.1

- Real hourlywageby skilllevel, 1997and2016 FIGURE 3 » Labourproductivity increased by 25per cent » Whileprovincial GDPpercapitaincreased by 57 impacting low-skilledworkers inparticular. the highestandlowestearnersisincreasing, standard oflivingforall.Inequalitybetween not translatedintoincreased wagesorabetter and GDPhave grown over theyears, buthave This trend is visible in Ontario - labour productivity growth andwagegrowth have beguntodiverge. advanced economies.More recently, economic and wageshave tendedtogrow intandem For mostofthepast200years, theeconomy inequality Wage growth and cent_work_in_the_green_economy.pdf. https://mowatcentre.ca/wp-content/uploads/publications/156_de tober, 2017. 4 Thirgood, J.McFatridge, S.Marcano, M.Van Ymeren, J.11Oc https://www.fin.gov.on.ca/en/economy/ltr/2017/ch3.html. Ontario’s Long-Term ontheEconomy Report ofFinance.2017.“ChapterIII:Employment3 Ministry Trends.” economy/ltr/2017/ch3.html Government of Ontario. Trends”. Ontario’s Long-Term on the Economy. Report Source: of Finance. 2017. “Chapter III: Employment Ministry 10 15 20 25 30 35 40 45 50 0 5 wage increased by just12percent. between 1997and2014,buttheaverage hourly about halfthatrate. adjusted after-taxincomeonlyincreased by per centbetween1976and2015,real median (Management) Skill Level Decent Work intheGreen Economy A

(Professionals) Skill Level https://www.fin.gov.on.ca/en/ A

3 Skill Level . B . Government ofOntario. Skill Level . TheMowatCentre. C 4 Skill Level 1 2016 997 D - - » ThenumberofOntarianswithincomesbelow » Between1981and2010,37percentof » GDPpercapitaincreased by 38percent 10 Ministry ofFinance.2017.“Chapter III:Employment10 Ministry Trends.” pub/75f0002m/2012002/lim-mfr-eng.htm more informationonLIM,see: ofFinance.2017.“ChapterIII:Employment9 Ministry Trends.” For Economy 8 Thirgood, J.etal.11October, 2017. of-total-income-in-many-countries.htm. http://www.oecd.org/social/top-earners-capturing-growing-share- income inmanycountries (OECD). 30April,2014. 7 Organization forEconomic Co-operationandDevelopment ofFinance.2017.“ChapterIII:Employment6 Ministry Trends.” reports/2016-canadianindex-wellbeing-national-report of Waterloo. Canadians ReallyDoing?The2016CIWNationalReport policy directions. See:CanadianIndexofWellbeing. 2016. across these indicators over time,theCIWoffers insightsinto new result ofavariety ofinterconnected domains.Bytrackingchanges takes asystemsapproach, recognizing thatqualityoflife isthe leisure andculture, livingstandards, andtimeuse.Theiranalysis cratic engagement,education,environment, healthypopulations, eight qualityoflife categoriesincludingcommunityvitality, demo conducted acomprehensive analysisofover 64indicators across GDP, cannotcapture. Since2011,the University ofWaterloo has Canadians are faringinaway thattraditionalindicators, suchas 5 TheCanadianIndexofWell-being aimsto (CIW) measure how » Whilereal wageshave grown quicklyforhigher- to increase over the years – from 5.9 per cent in the low-incomemeasure (LIM)hascontinued during thisperiod. saw itslargest increase inincomeinequality by thetop1percentofearners. Canada’s overall incomegrowth wascaptured increasing costofliving. employment, technologicalchangesand to continuewiththeriseinnon-standard by 9.9percent. Index ofWellbeing measure onlyincreased between 1994and2014,whiletheCanadian significant increases. such asmanagementandprofessionals, saw essentially flat,whilehighskillcategorizations, for jobsinlowerskillcategorizationswere Between 1997and2016,real hourlywages their wagesgrow muchmore slowly–ifatall. skilled professionals, lower-skilledworkers saw 1996 to 9.0 per cent (or 644,000 people) in 2014. . https://uwaterloo.ca/canadian-index-wellbeing/ 5 Top earnerscapturinggrowing share oftotal Thisdivergence islikely , says OECD 8 https://www.statcan.gc.ca/ 10 6 . SocialandWelfare Issues. Decent Work intheGreen . 7 Ontario . University . How are 9 -

7 | THE MOWAT CENTRE 8 | ROBOTS, REVENUES AND RESPONSES » Whileemployment in » Between1987and2016,the recent decades. cognitive skillshasincreased in non-routine jobsrequiring higher declined, whiletheproportion of goods-producing industrieshas jobs inmanufacturingand proportion ofstable,routine various typesofskills.The shifting thedemandfor technological progress are Ongoing automationand of skills Changing nature Employment Trends.” ofFinance. 2017.“ChapterIII: 11 Ministry and 5. jobs fell, asshowninFigures 4 while theproportion ofroutine a share oftotalemployment, manual jobsbothincreased as cognitive jobsandnon-routine proportion ofnon-routine 2016. but increased to22percentby 13 percentoftotaljobsin1987, professional jobsaccountedfor per cent.Managementand degree, increased by 145 typically require auniversity and professional jobs,which 1987 and2016,management declined by 20percentbetween manufacturing andutilities 11 -15 -10 100 120 140 FIGURE 4 brookfieldinstitute.ca/research-analysis/automation/ workforce Lamb, C. June 2016. www150.statcan.gc.ca/n1/daily-quotidien/170106/dq170106a-eng.htm Labour Force Survey, December 2016. Update_Commentary%20472%20web.pdf www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/ Impact ofAutomation onCanada’s Labour Market of data from Oschinski, M. and Wyonch, R. March, 2017. Government of Canada. This graph is based on concepts and the analysis and their prospects –Preliminary Draft ofanInternal Government Presentation Sources: of Finance. 26 January, Department 2018. by taskcategory, Canada Percentage pointchangeintheshareoftotal Canada, 1987-2016 Growth intheshareoftotalemployment, by task FIGURE 5 Survey, December 2016. on Canada’s Labour Market Oschinski, M. and Wyonch, R. March, 2017. their prospects Sources: of Finance. 26January, Department 2018. Commentary%20472%20web.pdf cdhowe.org/sites/default/files/attachments/research_papers/mixed/Update_ of Automation onCanada’s Labour Market developed by Oschinski, M. and Wyonch, R. March, 2017. Note: This analysis is based on an occupation classification methodology 10 15 80 -5 0 5

1987 1988 1989 Routine

1990 . Brookfield Institute for Innovation and Entrepreneurship (BII+E). 1991 1992 . This graph is based on concepts and the analysis of data from . This graph is basedon concepts and theanalysisofdata from 1993 1994 1995 Non-routine The Talented Mr. Robot:The impactofautomation onCanada’s

1996 Manual 1997 Non-routine cognitive

. and Statistics Canada. 6 January, 2017. Labour Force 1998 1999 2000 1987-2016 2001 2002 . 2003 Non-routine Cognitive 2004 The Daily

. C.D. Howe Institute. 2005 2016-2031

Non-routine manual 2006 ; Statistics Canada. 6 January, 2017. Future Shock?The Impact ofAutomation 2007 2008 . Government of Canada. 2009 . C.D. Howe Institute. 2010 Disruptive technologies Disruptive technologies Disruptive technologies and Disruptive technologies and 2011 2012

2013 . Future Shock?The Future Shock?TheImpact

Routine 2014 2015 https://www.

2016 employment, category, https:// https:// http:// . ; » Between1995and2013,60percentofthejobs workplace. work arrangementsasa“fissuring”ofthe David Weil hasdescribedthesurge inalternative previously thoughtofasimmunetoprecarity. education, andtoarangeofprofessions low-wage workers tothosewithpost-secondary arrangements are beginningtospread from it easiertohire andfire staff.Thesetypesof andlegislative burdensstatutory andmake arrangements are lesscostly, comewithfewer For employers, thesetypesofcontingent ofworkisincreasinglyand thissort common. benefits. Oftennon-standard workisprecarious, wages, are notunionized andcomewithout Precarious workincludesjobsthatpay lower time jobs,sub-contractingandself-employment. Non-standard jobs,part- workincludestemporary precarious work Non-standard and ment hasbeenfairly stableataround 27percentsince2010. Note thattheshare ofnon-standard employment intotal employ ofFinance.2017.“ChapterIII:Employment15 Ministry Trends.” precarious-jobs ing-workplaces-review-final-report/chapter-4-vulnerable-workers- Government of Ontario precarious jobs.” ofLabour.14 Ministry 2017.“Chapter4:Vulnerable workers in Harvard University Press. for SoManyandWhatCanBeDoneto Improve It 13 Weil, D. 2014. age-of-contracting-subcontracting-and-temp-work https://hbr.org/2017/03/making-employment-a-fair-deal-in-the- an AgeofContractingandTemp Work.” 12 Weil, D. 24March, 2017.“Howto Make Employment Fair in » Non-standard employment inOntarioincreased created inOrganisation forEconomic employment. 2017, mainlyduetoanincrease intemporary from 23.1percentin1997to26.7 the totalemployment in2013. jobs, withthesejobsmakingupaboutathird of countries couldbeclassifiedasnon-standard Co-operation andDevelopment (OECD) 13 . The Changing Workplaces Review – Final Report. The ChangingWorkplaces Review –FinalReport. The Fissured Workplace: Why Work BecameSoBad 15 . InOntario,between1997and https://www.ontario.ca/document/chang Harvard BusinessReview 14 . Cambridge MA: . CambridgeMA: .

12

. - - » Non-standard workers are aboutthree tofour w22667. NBER Working Paper, Alternative Work ArrangementsintheUnited States,1995-2015.” 21 Katz,L.Krueger, A.September, 2016.“TheRise andNature of ofFinance.2017.“ChapterIII:Employment20 Ministry Trends.” Economy 19 Thirgood, J.etal.11October, 2017. precarious jobs.” ofLabour.18 Ministry 2017.“Chapter4:Vulnerable workers in precarious jobs.” ofLabour.17 Ministry 2017.“Chapter4:Vulnerable workers in precarious jobs.” ofLabour.16 Ministry 2017.“Chapter4:Vulnerable workers in » InOntario,therateofunionmembership » ThenumberofOntarianswithmultiplejobs » Thesetrends are consistentwithwhatis increase. In2015,themedianhourlywagefor standard workers, andthisgapisprojected to the low-incomemeasure (LIM)compared to times more likely tohave incomesbelow increased considerablyinrecent decades. per centin1989and10.72016)have employment (4.7 cent in2016)andtemporary time jobs(13.5percentin1976and19.0 proportions ofemployment represented by part- in non-standard employment in2015. 27 percentofOntarioworkers were engaged as standard employment (1.2percent). 2.3 percentannually–abouttwiceasquickly 2015, non-standard employment increased by in 2016. declined from 35percentin1981to25 their needs. workers needmore thanasinglejobtomeet and 2016(5.4percent),suggestingthatmany more thandoubledbetween1976(2.2percent) for standard workers. non-standard workers was$15compared to$24 six workers intheUnited Statesin2015. other contractstaffaccountedfornearlyonein Temporary agencyworkers, freelancers and happening inotheradvanced economies. . 20 No.22667.http://www.nber.org/papers/ 19 Decent Work intheGreen 17 The 16 21 About 18

9 | THE MOWAT CENTRE 10 | ROBOTS, REVENUES AND RESPONSES standard andnon-standardemployment, Ontario,2011 Share ofworkers withe FIGURE 6 » Workplace pension-plancoverage hasdeclined » Non-standard workers are lesslikely toreceive bymany Ontarians,driven theincrease inpart innon-standard andprecarious employment. There hasbeenamarked declineinaccessto Access tobenefits 23 Ministry ofFinance. 2017.“ChapterIII:Employment23 Ministry Trends” precarious jobs.” ofLabour.22 Ministry 2017. “Chapter4:Vulnerable workers in Source: of Finance. 2017. “Chapter III: Employment Ministry Trends” . 10 20 30 40 50 60 70 80 0 workers. compared to53.8percentofstandard pension coverage –16.6percentin2011 non-standard workers are lesslikely tohave provided by private sectoremployers. Again, cent in2017,mostlyduetoreduced coverage from 42percentintheearly1990sto34 standard workers. employers in2011compared to74percentof insurance orhealthplansthrough their benefits –only23percentreceived medical Medical Insurance or Health Plan 23 22 Dental Coverage mployer-provided benefitsandpensionplans, Disability Insurance Life and/or employer-provided healthbenefitsandpensionplansfor » Overall, over 80percentofOntariansengaged Mowat Centre. https://mowatcentre.ca/working-without-a-net. a Net:RethinkingCanada’s socialpolicyinthenewageofwork 24 Johal,S.andThirgood, J.22November, 2016. Non-Standard Employment Standard Employment dental, drugsorlife insurance. in precarious workhave noaccesstovision, Employer Pension Plan 24 Working Without . The » Itisestimatedthattheunderground economy is growing, withimplicationsforbothworkers andtaxrevenues. sublets are andunreported apartment someexamples.Theundergroundcash sales,bartering economy to avoid paying taxeswith regulations.or complying Paying workers under thetable,notchargingtax on The underground economyrefers toillegaleconomicactivitiesundertaken by individualsorbusinesses The underground economy en/160620/dq160620b-eng.htm. in Canada,2013.” 26 StatisticsCanada.20June,2016. “Theunderground economy study-on-underground-economy-canada-1992-2013.html. news/newsroom/fact-sheets/fact-sheets-2016/statistics-canada- ment ofCanada.https://www.canada.ca/en/revenue-agency/ Study ontheUnderground Economy inCanada,1992-2013 25 CanadaRevenue Agency. 20June,2016. Newfoundland and Labrador Underground Economy as a Proportion ofGDP(by provinceUnderground Economy andterritory) asaProportion FIGURE 7 quotidien/160620/cg-b002-eng.htm. quotidien/160620/cg-b002-eng.htm. gross domestic product by province and territory, 2013.” Source: 2: Underground Statistics Canada. 20 June, 2016. “Chart economy as a proportion of underground economicactivityinOntario. of thisamount–$16.7billionisconnectedto cent ofGDP)in2013. were valued atabout$45.6billion(or2.4per transactions madeintheunderground economy Based onStatisticsCanada’s calculations, and 2013–atthesamerateasGDPgrowth. in Canadagrew by 3.8percentbetween2012 Prince Edward Island Northwest British Columbia New Brunswick Saskatchewan Nova Scotia

The Daily T Manitoba erritories Nunavut Canada Quebec Ontario Alberta Y ukon . http://www.statcan.gc.ca/daily-quotidi 25 More than36percent 0.5 Statistics Canada 1 . Govern 1.5 26 The Daily - - . http://www.statcan.gc.ca/daily- 2 » Thethree sectorsmostprone tounderground » Thesize oftheunderground economyinCanada in Canada,2013.” 28 StatisticsCanada.20June,2016. “Theunderground economy point-ottawa-loses-billions-in-undeclared-income/article4418504/. dmail.com/report-on-business/economy/economy-lab/tipping- undeclared income.” 27 Tedds, L.16July, 2012.“Tippingpoint:Ottawalosesbillionsin (11.7 percent). cent), andaccommodationfoodservices underground economy),retail trade(12.5per construction (estimatedat27.8percentofthe economy activitiesincluderesidential conservative estimates. may beeven larger thanStatisticsCanada’s 2.5 3 The GlobeandMail 28 3.5 27 . http://www.theglobean -

11 | THE MOWAT CENTRE If five per cent of existing jobs are at risk of automation over the next two decades, adjustments to our current labour market will be minimal. If that number is closer to half of existing jobs, then the disruption can only be termed seismic. 12 | ROBOTS, REVENUES AND RESPONSES AND REVENUES 12 | ROBOTS, 3 content/canada-and-changing-nature-work. 29 Policy Horizons Canada.1May, 2016. » Whatpeoplebuyandsell,asnewdigitalgoodsemerge intheeconomysuchasmobileappsand » Howbusinessesoperate,through newbusinessmodelssuchasthesharingeconomy (e.g.,Airbnb, » Howpeopleworkandwhatthey do,through typesoftasksandby enabling automationofcertain Together, these technologiesare changing: » Peer-to-peer platforms » AIapplicationsinmedicaldiagnosis,legalworkandfinance telepresence reality» Virtual andvirtual/augmented » 3Dprinting,andbioprinting » Roboticsthatautomatephysicaltasks » Blockchain andDistributedLedgerTechnology (DLT) » Rapidadvances inbigdataanalytics » TheInternetofThings(IoT) » Mobiledevices andhigh-speedinternetconnections have emerged inrecent years. Thesetechnologiesinclude: A numberoftechnologiesthatcouldunlocksignificanteconomicgainsthrough increased productivity Context manufacture. Digitization hasalsoreduced thecostof producing goodsthatpreviously required skilledlabourto suchasstreaming capturenew digitalservices services market share from traditionaloperators. cryptocurrencies, newcrowdfunding capabilities). Uber, Lyft), e-commerce (e.g.,Alibaba,Etsy, Amazon) andanumber offintechinnovations (e.g., virtual work totake placewithout regards togeographiclocation. MARKET AND THELABOUR TECHNOLOGY Canada andtheChangingNature ofWork 29 . Government ofCanada.http://www.horizons.gc.ca/en/

13 | THE MOWAT CENTRE 14 | ROBOTS, REVENUES AND RESPONSES disagree onwhatthelikely impactofautomation over thelongterm. resulted inahigherstandard ofliving–atleast, Historically, technologicaldisruptionshave quality jobswillbecreated tooffset theselosses. whetherenoughnewhigh- losses. Itisuncertain financial advice),there may besignificantjob through AI(e.g.,medicaldiagnosis,legalanalysis, cognitive tasksare unbundledandautomated technological developments. and non-routine manualjobsmore thandidpast AI are alsolikely toimpactnon-routine cognitive future. routine cognitive androutine manualjobsinthe stagnation oreven declineinthenumberof advanced economieswillresult inthecontinued If present trends continue,automationin tasks. of automation–whethercognitive orphysical which canbebroadly grouped togetherasforms jobs andthelabourmarket are AIandrobotics, attention intermsoftheirpotentialimpacton The technologiesthatare receiving themost AI, robotics andautomation krugman-sympathy-for-the-luddites.html. New York Times 32 Krugman,P. 13June,2013.“SympathyfortheLuddites.” tina. Page 6. G20 Brainstorming Workshop, September7-8.BuenosAires, Argen 31 Yusuf, S.2017. jobs-involving-routine-tasks-arent-growing. Louis. https://www.stlouisfed.org/on-the-economy/2016/january/ Aren’t Growing.” 30 Dvorkin, M.4January, 2016.“JobsInvolving RoutineTasks on jobswillbe.There are twomaincamps: 30 Newformsofautomationpowered by . https://www.nytimes.com/2013/06/14/opinion/ On theEconomy Blog Can thenewworldofworkberendered inclusive? 32 Thistime,however, analysts . Federal BankofSt Reserve 31 Asmore andmore The

- » A2016studyby MelanieArntzandcolleagues » Awidelycited2013studyby CarlBenediktFrey Countries.” Page 25. 36 Arntz,M.etal. 2016.“TheRiskofAutomation forJobs inOECD Countries.” Page 4. 35 Arntz,M.etal.2016.“TheRisk ofAutomation forJobsinOECD org/10.1787/5jlz9h56dvq7-en. Page 4. Employment andMigrationWorking Papers for JobsinOECDCountries:AComparative Analysis.” 34 Arntz,M.Gregory, T. Zierahn,U.2016.“TheRiskofAutomation view/1314. Page 38. School.https://www.oxfordmartin.ox.ac.uk/publications/Martin Employment: HowSusceptibleAre Jobsto Computerisation? 33 Frey, C.andOsborne,M.17September, 2013. automated by technology.” Thismay overestimate occupations ratherthansinglejob-tasksare in theiranalysis.They assumethat“whole and Osbornetake anoccupation-based approach disagreement, withmethodology. starting Frey There are anumberofreasons forthis between nationaleconomies;theproportion of cent. of jobslikely tobeautomatedisonly 9per for theOECDestimatesthatproportion Canadian jobsare athigh-riskofautomation. this studyinCanada,findingthat42percentof or two.” unspecified numberofyears, perhapsadecade [that] are potentiallyautomatableover some of totalUSemployment isinoccupations and MichaelOsbornesuggeststhat“47percent qualified theirfindingsinthree ways: important Austria’s is12percent. automatable jobsinKorea is6percentwhile 3] theirfindingsdonottake intoaccountnew 2] automationmay drive greater economic 1] theirfindingsrefer totechnological occupations thatmay becreated. and; growth thatwouldinturngeneratenewjobs; capabilities forautomation,notcertainties; 34 TheOECDfoundsignificantdifferences 33 TheBrookfield Institutereplicated 35 Arntzandcolleagues , No.189.http://dx.doi. The Future of 36 OECD Social, Oxford http://dx.doi.org/10.1787/5jlz9h56dvq7-en Automation forJobsin OECD Countries:AComparative Analysis.” on Canada’s Labour Market based on concepts and the analysis of data from Oschinski, M. and Wyonch, R. March, 2017. Future Shock? So a-future-that-works-automation-employment-and-productivity Productivity M. Miremadi, M. Bughin, J. George, K. Willmott, P. Dewhurst, M. January, 2017. ** T 17 September, 2013. * This estimate, from Lamb, C. June 2016. 10 to20years Estimates oftheshareCanadianworkers at FIGURE 8 Frey/Osborne* which refined thismethodologyestimatedthat14 impacted. argue more accuratelyreflects howjobswillbe focus ontaskswithinoccupations,whichthey the impactofautomation. pers and training”. 39 Nedelkoska,L.andQuintini,G. 2018.“Automation, skillsuse ment-2030 Page 22. Nesta. http://www.nesta.org.uk/publications/future-skills-employ ber, 2017. see Bakshi,H.Downing,J.Osborne, M.Schneider, P. 28Septem Countries.” Page 4.Though,thisapproach alsohasbeencriticized: 38 Arntz,M.etal.2016.“TheRisk ofAutomation forJobsinOECD Countries.” Page 4. 37 Arntz,M.etal.2016.“TheRiskofAutomation forJobsinOECD like theOECDstudy, McKinsey findsthatonly5 could beautomatedwithexistingtechnology. But suggests that49percentofpaidworkglobally A studyby theMcKinsey GlobalInstitute automation between50and70percent. while 32percentofjobshave aprobability of probability ofautomationhigherthan70percent, per centofjobsinadvanced economieshave a urce: of Finance. 26 January, Department 2018. his estimate, from Lamb, C. June 2016. Mckinsey** , No.202.http://dx.doi.org/10.1787/2e2f4eea-en. C.D. Howe The Future ofSkills:Employment in2030 OECD . McKinsey Global Institute. 38 OECD Social,Employment andMigrationWorking Pa Amore recent OECDstudy(2018)

0 The Future ofEmployment 5 ; Lamb, C. June 2016. 10 15 37 Arntzandcolleagues 20 https://www.mckinsey.com/mgi/overview/2017-in-review/automation-and-the-future-of-work/ The Talented Mr. Robot, The Talented Mr. Robot, 25 . .

. Pearson and The Talented Mr. Robot 30 Disruptive technologiesandtheir prospects 39 35 40 - - .

- high risk is based on the methodology developed by Frey, C. and Osborne, M. 45 is based on the methodology developed by Manyika,J.Chui, OECD Social,Employment and Migration Working Papers Occupation-based

and Arntz, M. Gregory, T. Zierahn, U. 2016. “The Risk of Skills 21.2 percent.Bakshi, H.etal.28September, 2017. 41 Thetheanalogousnumbersfor theUKare 8.0 percentand ment-and-productivity Page 5. and-the-future-of-work/a-future-that-works-automation-employ www.mckinsey.com/mgi/overview/2017-in-review/automation- Employment, andProductivity. tt, P. Dewhurst,M.January, 2017. 40 Manyika,J.Chui,M.Miremadi, M.Bughin,J.George, K.Willmo implication isthatitnotcurrently possibleto and thefateofremainder isuncertain. likely seetheirshares oftheworkforce decrease, cent are employed inoccupationswhichwill increase theirshare oftheworkforce, 18.7per employed likely inoccupationsthatwillvery that 9.6percentoftheUSworkforce are currently drawn. Instead,Bakshiandcolleaguesconclude theconclusionsbeing insufficient tosupport in allofthesestudiesthemethodsusedare Nesta, HasanBakshiandcolleaguesargue that Conversely, inastudyfortheBritishthinktank automation. per centofoccupationsare vulnerabletototal Task-based

approach approach . Page 89. » » ofbeingaffectedby automationinthenext A Future ThatWorks: Automation, Employment, and 40 . Government of Canada. This graph is . Government of Canada. This graph is McKinsey GlobalInstitute.https:// A Future ThatWorks: Automation, The Impact of Automation The Impact ofAutomation The Future of , No. 189. , No. 189. 41 The - -

15 | THE MOWAT CENTRE 16 | ROBOTS, REVENUES AND RESPONSES added totheworkforce reduces employment showing thateachadditionalindustrialrobot But Bakshiandcolleaguesalsociteotherstudies forindividuals. means uncertainty movement betweenjobsby workers, which this scenariowouldlikely involve significant than itdestroys. drives economicgrowth, creating more jobs productivity andloweringcosts,automation total. Onegroup ofstudiesargues thatby raising whether automationwillleadtofewer jobsin There isalsosignificantdisagreement over share oftheworkforce. their occupationswillincrease ordecrease asa say, formore than70percentofworkers, whether Countries.” Page 22. 46 Arntz,M.etal. 2016.“TheRiskofAutomation forJobs inOECD 45 Bakshi,H.etal.28September, 2017. Countries.” Page 24. 44 Arntz,M.etal.2016.“TheRisk ofAutomation forJobsinOECD 43 Bakshi,H.etal.28September, 2017. 42 Bakshi,H.etal.28September, 2017. withmachines. complementary are automatabletowards newonesthatare away from taskswithintheiroccupationthat oftheirjobsautomatedtendtoshift see part optimistic studiessuggestthatworkers who are offsetby jobsgainsinother sectors. limited evidence tosuggestthattheselosses by aboutseven workers, andnotethatthere is 43 Whileultimatelypositive, 42 The Future of Skills The Future of Skills The Future of Skills 46 44 45 . Page 23. . Page 23. . Page 89. More » Costofdeveloping anddeploying solutions » Technical feasibility affect therateofautomation: reasons. McKinsey pointstofive factorsthat automated buthave notbeenforavariety of to beautomated.” Manyjobscouldalready be between “couldbeautomated”and“are likely totakeIt isimportant intoaccountthedifference seismic. jobs, thenthedisruptioncanonlybetermed minimal. Ifthatnumberisclosertohalfofexisting adjustments toourcurrent labourmarket willbe risk ofautomationover thenexttwodecades, is unclear. Iffive percentofexistingjobsare at path forward forpolicymakers andthepublic Taking intoaccount,the theseuncertainties What factorswillinfluenceautomation? 50 Manyika,J.etal. January, 2017. Countries.” Page 22. Cf. Arntz,M.etal.2016.“TheRisk ofAutomation forJobsinOECD 49 Manyika,J.etal.January, 2017. 48 Manyika,J.etal.January, 2017. Countries.” Page 22. Cf. Arntz,M.etal.2016.“TheRisk ofAutomation forJobsinOECD 47 Manyika,J.etal.January, 2017. » Economic benefits » Labourmarket dynamics tasks tobeautomated. processing, stillneedtobeinvented formany Many tools,suchasbetternaturallanguage automation. quality products impactsthedeployment of The abilitytoenablegreater throughput orhigher where thecostoflabourisrelatively high. is more likely tooccurindeveloped economies influence decisionstoautomate.Automation The supply, demand andcostsofhumanlabour quite large andisthusoftenprohibitive. cost ofadoptingtheavailable technologycanbe Some taskscouldalready beautomated,butthe 50

A Future ThatWorks 47

A Future ThatWorks A Future ThatWorks A Future ThatWorks . Pages 10-11. 48 . Page 10. . Page 10. . Page 10. 49

growth required tomaintainlivingstandards. be ahighneedforlabourtopowertheeconomic especially inadvanced economies—there willstill to demographicsandtheagingpopulation— The McKinsey studyalsopointsoutthatdue andsocialacceptance » Regulatory “task bundles”sothatwhatwere oncecareers We are alsowitnessingthedeconsolidationofjob Pages 2-3. 55 Yusuf, S.2017. 54 Manyika,J.etal.January, 2017. Nature ofWork. 53 Policy Horizons Canada.1May, 2016. Bakshi, H.etal.28September, 2017. 52 Manyika,J.etal.January, 2017. Countries.” Page 22. Cf. Arntz,M.etal.2016.“TheRiskofAutomation forJobsinOECD 51 Manyika,J.etal.January, 2017. and TaskRabbit, andmatchmakingalgorithms. the Internet,onlineplatformslike MechanicalTurk by digitization,advances intelecommunications, theseon-demandtaskswas facilitated to perform marketplace ofindependentcontractorsavailable and labourmarket dynamics.The emergence ofa without acombinationoftechnologicalchange on-demand labour–couldnothave happened –thatis,contingent, rise ofthe“gigeconomy” by independentcontractors.The be performed employees are intojobsthatcan beingconverted Increasingly, jobsthatpreviously required third oftheirassociatedtasksautomated. many as60percentofoccupationscouldseea occupations canbetotallyautomatedbutas theresultThis ispartially ofautomation–few projects, andtasksthatcanbeautomated. are progressively broken jobs, upintopart-time becomes technicallyfeasible. much longerthanunskilledlabour, even afterit may beabletoresist automationoftheirwork political power, suchasregulated professions, Groups withsignificantsocialcapitaland Can thenewworld ofworkberendered inclusive? A Future ThatWorks The Future of Skills A Future ThatWorks A Future ThatWorks Canada andtheChanging 51

. Page 24. . Page 2. Cf. . Page 2.Cf. . Page 12. . Page 5. 54 53

52 55

17 | THE MOWAT CENTRE 18 | ROBOTS, REVENUES AND RESPONSES Per industry centofworkactivitieswiththe potentialforautomation,by FIGURE 9 and administration,inthatorder. professional information,healthcare, services, potential forautomationincludemanagement, professions thathave relatively lowlevels of automatable intheforeseeable future. Other with education,forexample,are likely tobe that only27percentofthetasksassociated automation thanothers.Oneanalysissuggests Some typesofjobswillbelessamenableto Pages 7. 56 Yusuf, S.2017. analysis in Lamb, C. June 2016. overview/2017-in-review/automation-and-the-future-of-work/a-future-that-works-automation-employment-and-productivity A Future ThatWorks: Automation, Employment, andProductivity Source: This graph is based on Manyika,J. Chui, M. Miremadi, M. Bughin, J. George, K.Willmott,P. Dewhurst, M. January, 2017. What typesofjobswillbeimpacted? Administrative and support, waste management and remediation

Professional, scientific and technical services Can thenewworldofworkberendered inclusive? Mining, quarrying, and oil and gas extraction Management of companies and enterprises Other services (exept public administration) Agriculture, forestry Accommodation and food services Information and cultural industries Arts, entertainment and recreation Real estate and rental and elasing Health care and social assistance T ransportation and warehousing The Talented Mr. Robot Finance and insurance Public administration Educational services , fishing and hunting 56 Wholesale trade Manufacturing Construction Retail trade Utilities . 0% . McKinsey Global Institute. 10% skilled workers. it coulddepress fortheselow- wagesfurther even ifautomationdoesnoteliminatethese jobs, customers. whichareand services increasingly valued by they are associatedwithdifferentiated products these occupationsoftenrequire lowskilllevels, will berelatively resistant toautomation.While suchasfoodpreparationservices, andhospitality, Another analysissuggeststhatnon-tradable 58 Manyika,J.et al.January, 2017. 57 Bakshi,H.etal.28September, 2017. 20% 30% 57 There are concerns,however, that https://www.mckinsey.com/mgi/ 58 40% 50% A Future That Works The Future of Skills 60% 70% . Page 14. . Page 13. 80% and and Distribution ofemployment by vulnerabilitytoautomation,by hourlywagegroup FIGURE 10 C. June 2016. Notes: This analysis based onestimates of the share ofjob-tasksthat can be automated using current techology, provided by Lamb, Lamb, C. June 2016. analysis of data from Oschinski,M. and Wyonch, R. March, 2017. Source: of Finance. 26 January, Department 2018. that interpersonalcompetencies,cognitive well. likely alsobeabletoresist automationrelatively professional —thoughnotallwill services lower potentialforgrowth inproductivity. are characterized by highlabourintensityand relatively lessimpactedby automationasthey Occupations inthepublicsectorare likely to be 61 Bakshi,H.etal. 28September, 2017. 60 Bakshi,H.etal. 28September, 2017. 59 Bakshi,H.etal.28September, 2017. overall. be astrong enoughsupplyofjobs inthefuture even ifnewtypesofjobsemerge, there willnot require. are Anumberofobservers concernedthat these newjobswillbeandwhatskillsthey will there islittlecompelling evidence tosuggestwhat predict whatskillswillbeindemandthefuture, of newtypesjobs,anddespiteattemptsto technological disruptionwillleadtothecreation While there isarelatively strong consensusthat skills willbecriticalforthejobsoffuture. competencies, learningstrategiesandsystems Per cent 100 10 20 30 40 50 60 70 80 90 0 60 Ultimately, Bakshiandcolleaguesargue Less than $15.50 The Talented Mr. Robot 28 23 50

The Talented Mr. Robot $15.50 to $22.60 21 32 47 ; and Statistics Canada. 6 January, 2017. Labour Force Survey, December 2016. The Future of Skills. The Future of Skills. The Future of Skills. ; and Statistics Canada. 6 January, 2017. Labour Force Survey, December 2016. $22.60 to $33.30 Disruptive technologiesandtheir prospects 59 44 17 38 Page 89. Page 13. Page 14. Some 61 More than $33.30 Future Shock?TheImpact ofAutomation onCanada’s Labour Market com/academy/lesson/child-labor-in-the-1900s.html. tion 1648to thePresent: HelpandReview. 64 Sullivan, N.NoDate.“ChildLaborinthe1900s.” history/. Association. https://eh.net/encyclopedia/hours-of-work-in-u-s- 63 EH.net.NoDate. 62 Manyika,J.etal.January, 2017. Inspite essentially abolishedintheglobalnorth. in 1988. worked perweekfrom about60 in1900to38 that resulted inareduction intheaverage hours was characterized by hugeproductivity growth during mostofthe20thcentury. Thelastcentury between recent trends andthoseexperienced income isperhapsthegreatest difference The decliningshare ofGDPcaptured by labour this trend, creating significantsocialpressures. accelerate advances inautomationcouldfurther in advanced economiessincethe1970sand years. Thewageshare ofGDPhasbeenfalling growth inadvanced economiesover thepast40 income inequalitythathascharacterized exacerbatethetrendwill further towards greater Indeed, itisanopenquestionwhetherautomation 37 56 7 63 70% HIGH RISK 30-70% MID RISK 30% LOW RISK Childlabour, commonin1900, Hours ofWork inU.S.History . This table is based on concepts and the . This tableis based on concepts and the A Future ThatWorks Study.com. https://study. . Economic History Western Civiliza

64 . Page 18. was ; 62 -

19 | THE MOWAT CENTRE 20 | ROBOTS, REVENUES AND RESPONSES number oftechnologistsare suggestingthat these market trends. For example,anincreasing require creative government policiestooffset gains from technologicaladvancement willlikely this context,achieving afairer distributionofthe skew thegainstowards theownersofcapital.In and displaceslarge numbersofworkers, can labour,much lessdependentoncomplementary participation. being usedstillneededsubstantialhuman this periodwassuchthatthenewequipment The technologicalchangethatoccurred in living increased. capital intensity, real wagesandstandards of of alarge shiftintheeconomyfrom labourto centre.ca/basic-impact/. Basic IncomeonSocialEntrepreneurs Yip, C.May 2017. 67 Seethediscussionofthisidea onpages31-32inUrban,M.and something-for-everyone-0000546-v22n1. Behind Universal BasicIncome.” 66 Schneider, N.6January, 2015. “WhytheTech EliteIsGetting Literature cal change,inequality, andthelabormarket”. neutral amongdifferent typesofskills.Acemoglu,D. 2002.“Techni labour. Withrespect to workers, technologicalchangemay benon- constant iftechnologicalchangeisneutralasbetweencapitaland logical progress. share Labour’s ofnationalincomewouldonlystay 65 Ineconomictheory, thisisreferred to asnon-neutraltechno need tobeprioritiesmoving forward. from anindividual’slabourmarket statuswill shift inattitudestodisconnectsocietalself-worth the economyasitevolves, anddrivingacultural training thatwillenablepeopletocontribute broad provision ofthetypeseducationand create significantsocietalproblems. Ensuring provided withgenerous welfare benefits,could Having alarge numberofunemployed, even if from workalsorepresent anenormouschallenge. from thelossof self-esteemthatoftencomes is, wouldnotbesufficient.Theproblems thatflow Solving theincomeproblem, challengingasthat basic incomewillbecomenecessary. transformational re-distributive policiessuchasa . 40(1)7-72. Basic Impact:ExaminingthePotential Impactofa 65 Technological changethatis Vice. . MowatCentre. https://mowat http://www.vice.com/read/ Journal ofEconomic 67 66 - - - Looking atthegigeconomy cent) is very low.cent) isvery (0.2per accommodationservices or short-term of ride-sourcing (0.3percentofthepopulation) age of18whoactuallyoffer asproviders services for afew years, thenumberofCanadiansover the given theseplatformshave onlybeeninexistence However, whileusageratesare relatively high Canadians amountstoatotalof$1.31billion. by accommodationservices and short-term The estimatedspendingonride-sourcing services sourcing accommodationservices. orshort-term adult population—usedpeer-to-peerride- million people—9.5percentoftheCanadian Between November 2015andOctober2016,2.7 in Canada.” 69 StatisticsCanada.28February, 2017.“The sharingeconomy en/170228/dq170228b-eng.htm. in Canada.” 68 StatisticsCanada.28February, 2017.“The sharingeconomy quotidien/170228/dq170228b-eng.htm. economy in Canada.” Source: Statistics Canada. 28 February, 2017.“The sharing 2015 toOctober2016) Number ofsharingeconomyusers(November FIGURE 11 private accommodationservices aged 18andolderwhoused Proportion ofthepopulation 18 andolder(thousands) aged accommodation services Number ofusersprivate peer-to-peer rideservices aged 18andolderwhoused Proportion ofthepopulation (thousands) aged18andolder ride services Number ofuserspeer-to-peer The Daily.

https://www.statcan.gc.ca/daily-quotidi The Daily. 69 https://www.statcan.gc.ca/daily- Canada 1,196.0 1,982.4 7.0% 4.2% Ontario 1,230.0 11.1% 476.6 4.3% - 68

quotidien/170228/dq170228b-eng.htm. quotidien/170228/dq170228b-eng.htm. economy in Canada.” S November 2015toOctober2016 from and private accommodationservices Total spendingonpeer-to-peer ride services FIGU youth andlow-skilled individuals – are particularly and programs growth couldcreate challengesforsocialpolicy be growing by about33percenteachyear. platforms globally, andthis market is estimated to about 48millionworkers were registered onsuch series ofemployers around theworld.In2013, and remotely contractswitha onshort-term to cutcosts,andindividualscanworkvirtually economy, where employers canoutsource tasks rise ofonlineplatformshasfacilitatedthegig dramatically impactthefuture ofwork.The that onlineplatformsoffer could services Nevertheless, there isagrowing awareness port_eng_2_0.pdf. port_eng_2_0.pdf. Ontario. https://files.ontario.ca/books/mol_changing_workplace_re An AgendaFor Workplace Rights–FinalReport. ofLabour.71 Ministry May 2017. Nature ofWork 70 Policy Horizons Canada.1May, 2016. is more precarious. overrepresented inthegigeconomy, where work Canada Outside Canada o urce: Statistics Canada. 28 February, 2017.“The sharing

RE 12 . Peer-to-peer ride Peer-to-peer ride millions of Canadian millions ofCanadian

71 services asvulnerablegroups –suchas dollars The Daily. 240.8 https://www.statcan.gc.ca/daily- N/A The ChangingWorkplaces Review: Canada andtheChanging millions of Canadian millions ofCanadian accommodation accommodation Government of services Private Private dollars 70 698.2 366.7 This -

21 | THE MOWAT CENTRE Whether the gig economy facilitates the ‘unbundling’ of work – leading to more part-time, temporary and contingent opportunities at the expense of full-time positions with benefits – remains to be seen. The extent to which it will result in an increase in non-standard employment will largely hinge on business practices, regulatory standards and a range of other factors. If non-standard employment becomes the norm beyond vulnerable groups like youth and low- skilled workers, significant changes to both social supports and taxation will be necessary. 22 | ROBOTS, REVENUES AND RESPONSES AND REVENUES 22 | ROBOTS, 4 2016. new worldofworkseeJohal,S.and Thirgood, J.22November, 72 For andthe more detaileddiscussionofsocial policysupports non-standard workers typicallydo notqualify. benefits has grown rapidly – in large because part of Canadianswhodonotqualifyforregular away from traditionalemployment, theproportion labour market. Asthenature ofworkhas shifted EI isbasedonadatedunderstandingofthe through nofaultoftheirown. benefits” forthosewhohave recently lostajob towards incomeassistance knownas“regular temporarily. Mostprogram fundingisdirected Canadianswhoarethat support outofwork programscomprises anumberofcontributory is administered by thefederal government and Canada’s Employment Insurance(EI)system and trainingprograms Employment insurance Below isabriefassessmentofthree key policyandprogram areas workers thatsupport inOntario. architecture hasfailedtokeep pace. with benefits)wasthenorm.Asnature ofworkhaschangedover thepast70years, oursocial the periodimmediatelyafterSecondWorld War, whenstandard employment (i.e.,afull-timejob changing nature ofwork?Manythecore planksofCanada’s socialarchitecture were designedin labour market ofthefuture? Are existingfederal andprovincial adequategiven the socialsupports How well-prepared are CanadaandOntariotoaddress the challengesworkers willexperienceinthe Working WithoutaNet ARCHITECTURE AND CANADA’S SOCIAL IMPACTS ON WORKERS .

Wood.pdf. policyalternatives.ca/Harper_Record_2008-2015/11-HarperRecord- Canadian Centre forPolicy Alternatives: 183-200.https://www. cent ofunemployed workers inotherprovinces. received regular EIbenefits,compared to44per in 2017,only29 per cent of unemployed Ontarians hard:This seemstobehittingOntarioparticularly in Healy, T. andTrew, S.(eds). workforce development programs undertheHarpergovernment”. 75 Wood, D. 2015. “Hollowingoutthemiddle:Recastingfederal back-to-work/. market partnership Morden, M.August 2016. 74 For amore in-depthexplorationofthisandrelated issues,see ofFinance.2017.“ChapterIII:Employment73 Ministry Trends.” of the lowest rates among advanced economies. fall asaproportion ofGDP–andisalready one workplace development programs continuesto Furthermore, Canada’s rateofinvestment in able toaccessvitalretraining opportunities. benefits, manyunemployed workers are not Consequently, asfewer peoplequalifyfor training programs are alsotiedtoEIeligibility. Most publicly-fundedemployment andskills . TheMowatCentre. https://mowatcentre.ca/ Back to Work: ModernizingCanada’s labour The HarperRecord 2008–2015. 74 72

73 75

23 | THE MOWAT CENTRE 24 | ROBOTS, REVENUES AND RESPONSES Government spending ontrainingprogramsasashareofGDP, selectedOECDcountries,2015 FIGURE 13A Share of labour force participating inpubliclyfundedinstitutionaltraining,selectedOECDcountries,2015 Share oflabourforceparticipating FIGURE 13B Notes: Expenditures are for 2015 or the latest year available. Source: OECD. “Education at a Glance”. United States New Zealand New Zealand Netherlands Netherlands Switzerland Switzerland Germany Germany Denmark Denmark Australia Australia Hungary Hungary Portugal Portugal Sweden Belgium Sweden Belgium Canada Canada Norway Norway Greece Finland Finland Greece Mexico Poland France Austria Poland France Austria Ireland Ireland Japan Korea Spain Spain Italy 0

0.5 0.1 OECD Average OECD Average 1 0.2 1.5 OECD.Stat 0.3 . 2 https://stats.oecd.org/ 2.5 0.4 3 0.5 .

3.5 0.6 4 » Intheabsenceofworkplacepensions, » Thepercentage ofworkers covered by a is littleintheway ofgovernment support. the absenceofworkplace-provided benefits,there employees ratherthannon-standard workers. In exist are mostlyavailable tofull-time,permanent becoming lesscommon,andthebenefitsthatdo employees andtheirfamilies.Suchbenefitsare workplace pensions andvarious other benefits for Employers inthepasttendedtoprovide health benefits Public pensionsand (PEPSO). http://www.unitedwaytyr.com/document.doc?id=91. Well-being 2013. Procyk, S.Rosen,D. Shields,J.Viducis,P. Vrankulj, S.February 78 Lewchuk,W. Lafleche,M.Dyson,D. Goldring,L.Meisner, A. ofFinance.2017.“ChapterIII:Employment77 Ministry Trends.” ofFinance.2017.“ChapterIII:Employment76 Ministry Trends.” » Over 80percentofworkers injobs classified Canada’s publicpensionsystemhasthree were employed part-time. tenth heldmultiplejobsandanotherone-tenth with workplacepensionplans,onlyaboutone- standard employees: amongOntarioworkers per centin2017. 42 percentofworkers intheearly1990sto34 workplace pensioninOntariohasdeclinedfrom insurance in2013. benefits suchasvision,dental,drugandlife as precarious inOntariodidnotreceive any vehicles. currently notsaving forretirement through other aged Canadianshave orare notstarted Supplement. However, nearlyhalfofworking- Old AgeSecurity, andtheGuaranteedIncome Plan andequivalent Quebec Pension Plan, in theirretirement: theCanadianPension Canadians components thataimtosupport It’s More thanPoverty: Employment Precarity andHousehold . Poverty andEmployment Precarity inSouthernOntario 76 Pensions are rare fornon- 78 77 There are thatcan arangeofsocialsupports Other socialsupports » WhileourMedicare systemcovers medically fits-people. of Ontariosee:https://www.ontario.ca/page/tax-credits-and-bene provided80 For adetailed listofsuchsupports by theGovernment canadas-health-care-system/. mowatcentre.ca/unfilled-prescriptions-the-drug-coverage-gap-in- age GapinCanada’s HealthCare System 79 Handren, L.2June, 2015. » Canadahasbeencriticized inthepastforits below: key pillarsofoursocialarchitecture are described provided by various levels ofgovernment, afew arewomen. Whileanumberofsuchsupports among labour market particularly participation, as, forexample,childcare whichcandrive higher have otherspecificworkrelated impactssuch others. – suchaschildcare, affordable housingandmany provide workers asenseofstabilityandsecurity government support. vision care are alsolargely notcovered by covered by private insurance.Dentalcare and of 2018,thoseaged24andunderwhoaren’t seniors, thoseonsocialassistanceandas coverage –inOntariothisisavailable for coverage. care withoutalsoproviding universal drug thatprovidesonly country universal health Canadaremainsphysician services, the costssuchashospitalvisitsand necessary income (subtractinganyfederal payments provided adjustednet basedonthefamily’s Ontario, subsidiesforchildcare are services approaches thispolicydomaindifferently. In to theprovinces forthispurpose,each province federal government notionallyprovides funds spaces andprohibitively highcosts.Whilethe parents stillstrugglewithalackofavailable lack ofcomprehensive childcare policyand 80 Moreover, programs certain canalso 79 Provinces eachprovide limited Unfilled Prescriptions The DrugCover . TheMowatCentre. https:// - -

25 | THE MOWAT CENTRE 26 | ROBOTS, REVENUES AND RESPONSES » Theprovincial government hasalso » Housingaffordability isanotherkey concern ticle34757648/. toronto/ontario-housing-16-big-changes-explained-in-charts/ar Globe andMail and housingreform: 16bigchanges, explainedincharts”. 84 Cardoso, T. andAnnett,E.12November, 2017.“Ontario’s rent aspx?did=13683 Government ofOntario. 2016. ofMunicipalAffairsandHousing.March83 OntarioMinistry housing-strategy/article37173057/. globeandmail.com/opinion/no-ottawa-has-not-put-forth-a-national- a nationalhousingstrategy”. 82 Hulchanski,D. 4December, 2017.“No,Ottawahasnotputforth content/uploads/GrowingPains_ChildcareinCanada.pdf. in Canada 81 Johal,S.andGranofsky, T. June2015. » Otherelementsofoursocialarchitecture, investments andtheSurvivors ofDomestic zoning, housing supportive such asinclusionary modernize socialhousingthrough initiatives increase supplyofaffordable housingand Housing Strategy, updatedin2016tohelp implemented theOntarioLong-Term Affordable in itsproposals. been metwithcriticismfornotgoingfarenough housing inthe1990s.Thestrategyhasalso as itlargely steppedaway from affordable government from isstarting asignificantdeficit, Housing Strategyispromising, thefederal housing strategy. WhilethenewAffordable recently, Canadadidnothave anaffordable for bothhomebuyers andrenters. Untilvery stagnation andskyrocketing market prices for workers simultaneouslyexperiencingwage $1,800 eachmonthforinfantcare. families canexpecttopay fees approaching little helpincitieslike Toronto, however, where from theCanadaChildBenefit).Thismay beof measures. to assessthesustainedimpactsofthese housing affordability, thoughitistooearly introduced sweepingmeasures toaddress but related battle,Ontariohasalsorecently Violence PilotProject. Ontario’s Long-Term Affordable HousingStrategy:Update . TheMowatCentre. http://social-architecture.ca/wp- . https://www.theglobeandmail.com/real-estate/ 84 . 82 http://www.mah.gov.on.ca/AssetFactory. The GlobeandMail. 83 To fightadifferent Growing Pains: Childcare https://www.the 81 The . - - – FinalReport ofLabour.87 See:Ministry 2017. A. https://www.ontario.ca/laws/statute/95l01?search=e+laws. ment ofOntario.LabourRelations Act,1995,S.O. 1995,c.1,Sched. 2000, c.41,https://www.ontario.ca/laws/statute/00e41 Govern 86 Government ofOntario.Employment Standards Act,2000, S.O. Review a Net in Johal,S.andThirgood, J.22November, 2016. how eachisholdingupgiven recent economic shifts,seeanalysis 85 For more in-depth discussion around theseotherelements,and result ofthechangingnature ofwork. asignificantindependentreviewunderwent asa resolution. bargaining, tradeunionsandworkplacedispute functionssuchascollective other important and theLabourRelationsAct(1995)outlines employers inmostofOntario’s workplaces, roles andresponsibilities foremployees and Standards Act(2000),forexample,outlines face intoday’s economy. implications onthereality workers currently such asprovincial legislation,have important . and Ministry ofLabour.. andMinistry May 2017. . . 86 Bothofthesepieceslegislation The ChangingWorkplaces Review 85 TheEmployment The ChangingWorkplaces Working Without 87 - position of bidding position of bidding themselves in the themselves in the professionals like professionals like lawyers may find lawyers may find for tasks against for tasks against workers located workers located anywhere in the anywhere in the engineers and engineers and Highly skilled Highly skilled world.

27 | THE MOWAT CENTRE POTENTIAL IMPACTS ON ONTARIO’S 5 REVENUE BASE Clearly, significant shifts in the nature of work are underway worldwide. These changes, partially driven by technological changes and partially driven by other factors such as globalization, are straining a set of social policies devised by Canada’s various governments for a different context. These changes will have significant impacts on a variety of areas of governmental responsibility, including revenue generation.

In this section, we review some of the most significant threats to Ontario’s current system for raising revenues. Specifically, we examine how the following trends and developments could undermine Ontario’s ability to raise the revenues needed to operate government programs upon which Ontarians depend. » Increased automation » The rise of the “gig economy” » Digital outsourcing » Internet-enabled jurisdictional arbitrage » The shift to a service-for-data economy » Commercial consolidation » Platforms and the underground economy » The emergence of crypto-assets

Before exploring the potential impact of these trends and developments on Ontario’s revenues, however, we begin this section with a quick overview of how the Government of Ontario currently finances its operations and programs and the revenue sources on which it draws to do so. 28 | ROBOTS, REVENUES AND RESPONSES AND REVENUES 28 | ROBOTS, 2016-17 revenue by source($140.7billion) FIGURE 14 » Otherincomesuchasvehicle anddriver » Incomefrom government-owned corporations, » Othertaxes, e.g.gasolineandalcohol » Transfers from theGovernment ofCanada revenue camefrom othersources, suchas: tax) revenues. Therest ofthegovernment’s and $5.9billioninEmployer HealthTax (payroll $14.8 billionincorporationstax(CT) revenues, (PIT) revenues, $24.7billioninsalestaxrevenues, $30.7 billioncollectedinpersonalincometax accounted for$94.3billionofthisamount,with revenue was$140.7billion.Taxation revenue In thefiscalyear 2016-2017Ontario’s total Ontario’s revenue context Note: Percentages may not add to 100 per cent due to rounding. 1, page 14. publicaccounts_annualreport_cfs_2017-9.pdf Chart 2016–2017. andConsolidated FinancialStatements Ontario: AnnualReport Source: Treasury Board Secretariat. 1 registration fees, royalties, etc. e.g., theLiquorControl Board ofOntario(LCBO) ($24.5 billion) 7% 1 1% 1 7% Government of Ontario. https://files.ontario.ca/en_

1 8% 1 5% 22% Public Accounts of Public Accountsof Corporations tax Sales tax Personal income tax Other non-tax revenue Other taxes Federal transfers

to keep inmindthenature ofthecurrent tax future? To answerthisquestion,itisimportant PIT, CT, salestaxandpayroll taxrevenues inthe How willchangesinthelabourmarket impact nature ofworkspurred by technologicalchange. significantly exposedtopotentialchangesinthe increased by thefactthattheserevenues are these revenue sources forouranalysisisonly annual provincial revenues. of Theimportance together constitutingnearly55percentoftotal toOntario’s important finances, particularly PIT, CT, salestaxandpayroll tax,asthey are In thissectionwefocusourattentiononthe Tax%20Guide.pdf. http://www.goodmans.ca/docs%5CCanadian%20Corporate%20 89 GoodmansLLP. October 2007. tax.html. home.kpmg.com/xx/en/home/insights/2011/12/canada-income- international executives 88 KPMGLLP. 1January, 2018. » CorporationsincorporatedinOntarioare » PIT ispayable forindividualsdeemedresident relationships: and individuals–traditionalemployment premised onresidency –forbothcorporations regime. For PIT, CT andpayroll tax,thisregime is meets inOntario). domestically (e.g.,theirboard ofdirectors central managementandcontrol islocated may bedeemedresidentcountry iftheir corporations incorporatedoutsidethe deemed resident inOntario,whileeven Ontario-based employer. employees engagedinworkOntarioforan etc). economic interests, locationofbankaccounts, residency (e.g.,nature ofstay, centre of in Ontario,withahostoffactorsdetermining 88 Payroll taxes typically applytothose . KPMGInternationalCooperative. https:// 89 Canada -IncomeTax: Taxation of Canadian CorporateTax Guide .

29 | THE MOWAT CENTRE 30 | ROBOTS, REVENUES AND RESPONSES of theOntariogovernment. administered by thefederal government onbehalf from anOntario-based seller. InOntario,HSTis is appliedtopurchases madeinOntariowhen per centprovincial RetailSalesTax (RST).HST TaxGoods andServices (GST)and theeight a meansofcombiningthefive percentfederal was created in2010whenitwasintroduced as inOntario. TheHST most goodsandservices of 13percentiscollectedatpointsalefrom slightly different. AHarmonized SalesTax (HST) The systemforsalestaxes collectedinOntariois greater forindividualsduetoprogressivity. incomes —althoughtherelative difference is pay more taxes thandoindividualswithlower profits, andindividualswithhigherincomes pay more taxes thandocorporationswithlower Consequently, corporationswithhigherprofits higher incomelevels are taxed athigherrates. is aprogressive system,where individualswith million intheprevious taxyear. taxable capitalemployed inCanadaunder$10 drops to3.5percentforcorporationswith Ontario’s CT isaflatrateof11.5percent,but individuals-current-previous-years.html#provincial. frequently-asked-questions-individuals/canadian-income-tax-rates- www.canada.ca/en/revenue-agency/services/tax/individuals/ als -current andprevious years 91 CanadaRevenue Agency. rial-corporation-tax/ontario-provincial-corporation-tax.html. cy/services/tax/businesses/topics/corporations/provincial-territo Government ofCanada.https://www.canada.ca/en/revenue-agen 90 CanadaRevenue Agency. . Government ofCanada.https:// Canadian incometaxratesforindividu Ontario –Provincial corporationtax 90 Ontario’s PIT 91 .

- - - developments inareas like robotics andartificial the implementationofnewtechnological understand. Increased automationthrough are fairlystraightforward andeasyto erode the revenue baseforgovernments will disruptthelabourmarket and,insodoing, Some oftheways thattechnologicalinnovation INCREASED AUTOMATION adding tothecomplexity. of thesefactorsinteractwitheachother, further disruption couldimpactOntario’s revenues. Many the nature ofworkbeingdriven by technological There are anumberofways that thechangesto Threats torevenue the case. produce thesamelevel ofvalue aswaspreviously the result thatfirmsrequire fewer employees to have beenadopted,productivity hasgrown, with in patternsofemployment. Asnewtechnologies how technologyhaspreviously ledtochanges examining collected thatitimplies,isworth the magnitudeofpotentialchangeintaxes could result from increased automation,and To getasenseofthemagnitudeshiftthat lower thancombinedPIT andpayroll taxrates. lost PIT andpayroll taxes asCT ratestendtobe on theseprofits may notfullycompensateforthe use oftherobot, theincreased CT taxes collected if thefirmsgenerateincreased profits duetothe these workers would have spent.Moreover, even workers’ employer orsalestaxontheincomethat nor willthey beabletocollectpayroll taxfrom the the worker orworkers whohave beenreplaced, will nolongerbeabletocollectincometaxfrom a worker isreplaced by arobot, thegovernment intelligence (AI)isonesucharea. For instance,if had hasbeenprofound. few decades.Already, theimpactthatthey have expand theirimpactontheeconomyinnext automation like theInternet,are onlygoingto form ofrobotics, AIorintechnologiesthatenable Advances inautomation,whetheritbethe merging withMobil,alarger rival. employs fewer thanhalfthat number–even after employed 150,000workers inthe1960sandnow as well.Exxon, theworld’slargest oilcompany and automationare reproducing itinotherfirms technology companies,technologicaladvances While thispatternismostpronounced among and employs only75,000workers. parent company–isvalued atUSD$570billion, workers intheUSA.Similarly, Alphabet–Google’s USD $750billionin2017,hadroughly 80,000 750,000 workers. Bycomparison,Apple,worth $267 billion(in2017dollars)andemployed over its mostvaluable. USD In1964,AT&Twasworth innovative firmsinthe1960saswelloneof For example,AT&TwasoneoftheUSA’smost technological advancement from different eras. one compares firmsonthecuttingedgesof evidentThis patternisparticularly when port/2016/09/17/the-rise-of-the-superstars stars”. 93 Wooldridge, A.17September, 2016.“Theriseofthesuper ees-doubled-headcount. net/2017/7/24/16022210/alphabet-google-employment-employ since 2013to more than75,000.” R. 24July, 2017. “Alphabethasnearlydoubleditsheadcount magazine/archive/2015/07/world-without-work/395294/ ;Molla, Without Work.” created-so-far.html; Thomson,D. July/August 2015. “AWorld www.cnbc.com/2017/05/04/heres-how-many-jobs-apple-has- US jobs—here’s howmanyit’screated sofar.” CNBC.https:// 92 Gurdus, E.4May, 2017.“Apple’s investing $1billionto expand average, by 32percentyear between2008 five e-commerce retailers intheworld grew, on distant prospect. However, revenues ofthetop retailbricks andmortar companiesseemeda traditional digital platformsmightoutperform For example,adecadeago,thepossibilitythat The Economist The Atlantic . https://www.economist.com/special-re . https://www.theatlantic.com/ Recode . https://www. recode. . 93 92 - - - 2017 nineofthetop20were technologyfirms. measured by market capitalization,whileby was amongthetop20firmsinworldwhen the world.In2006,onlyonetechnologycompany increasingly becomingthemostvaluable firmsin the past.Large globaltechnologyfirmsare forafirm’simportant successthanitwasin innovation isarguably becomingeven more Indeed, theapplicationoftechnological adoption. industrial outputisaresult ofdigitaltechnology Similarly, inEurope, closetoathird ofgrowth in one percentyear duringthesameperiod. European Union(EU)retail sectoraveraged only and 2016,whilerevenue growth intheentire ft.com/content/19e214d6-f7c7-11da-9481-0000779e2340. and FinancialTimes.9June,2006. services/assets/pdf/global-top-100-companies-2017-final.pdf market capitalisation 96 IPOCentre. 31March, 2017. from theCommissionto theEuropean Parliament andtheCouncil 95 European Commission.21September, 2017. tion/files/1_en_act_part1_v10_en.pdf. Single Market A Fair andEfficient Tax SystemintheEuropean UnionfortheDigital from theCommissionto theEuropean Parliament andtheCouncil: 94 European Commission.21 September, 2017. replace theserevenues. or thatitwilloccurtotheextentrequired tofully revenue, there isnoguaranteethatthiswilloccur offset thelossesinPIT andpayroll andsalestax because ofit–willfindotherjobsthatcould automation –orworkers whoare never hired possible thatworkers wholosetheirjobsto and more workers willbeimpacted.Whileitis the nearfuture withthelikely result thatmore enhancing technologieswillonlyincrease in growth through theadoptionofnewproductivity- This trend suggeststhatthepressure toachieve 95 . https://ec.europa.eu/taxation_customs/sites/taxa . PwC.https://www.pwc.com/gx/en/audit- Global Top 100Companiesby Global 500. 2006.https://www. Communication Communication 94 . 96

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31 | THE MOWAT CENTRE 32 | ROBOTS, REVENUES AND RESPONSES their abilitytospendwiththeresult thatsalestax income tax. employment, withtheresult thatthey willpay less employment tendtoearnlessthoseinstandard decline. Thisisbecauseworkers innon-standard from PIT, payroll andsalestaxes willalso employed innon-standard work,taxrevenues If agreater proportion oftheworkforce is climb, perhapsdramatically. engaged inprecarious workwilllikely continueto continue togrow, theproportion ofOntarians and otherformsofindependent,contingentwork growth ofthe“gigeconomy.” Ifthegigeconomy drivers ofthisshiftgoingforward couldbethe was employed inthisway in1997.Oneofthe 2017. Thiscompares withthe23.1percentthat workforce employed ofjobsin inthesesorts the pasttwodecadeswith26.7percentof non-standard workhassteadilyincreased over of employment. InOntario,theprevalence of market isthemove towards non-standard forms trendsmost important inthecurrent labour We have already discussedhowoneofthe ECONOMY THE RISEOFGIG 98 JohalandThirgood, 97 Weil, D. 2014. firms willnotneedtopay payroll taxeither. are independentcontractors,andnotemployees, also fall.Sincemanyworkers inthegigeconomy revenues generatedfrom theseindividualswill 98 The Fissured Workplace Earninglessincomewillalsoreduce Working WithoutaNet 97 . . employees withrobots, AI,or“gig”workers are also assumesthatthefirmsreplacing standard In addition,thisCT-replacement hypothesis taxes. does thecombinationofPIT andpayroll andsales generally lowerrateatwhichCT appliesthan may notbeanadequatereplacement duetothe more value. We have already discussed how CT as firmsbecomemore productive andcreate being described,CT revenues couldincrease sales taxes mightfallduetothedevelopments presented sofaristhatwhilePIT andpayroll and One potentialrebuttal tomuchoftheanalysis DIGITAL OUTSOURCING changing-nature-work?wbdisable=true. Nature ofWork 99 Policy Horizons Canada.1May, 2016. users andfacilitatemillionsofjobtransactions Freelancer whichalready hosttensofmillions platforms suchasMechanicalTurk, Upworkand the globalmarketplace through theuseofonline work thatformerlyconstitutedthesecareers into becomes mucheasiertomove proportions ofthe because,onceunbundled,it This ispartially determining thefuture ofOntario’s workforce. gigs andmicro-tasks –willplay acriticalrole in jobsinto the “unbundling”offullandpart-time and break downcareers –i.e., incomponentparts commodifylabour of newtechnologiestofurther The extenttowhichfirmscanleverage thepower as ifthey were locatedinOntario. establishment inanotherjurisdictiontooperate reality are enablingfirmswiththeirpermanent advances intelepresence andvirtual/augmented not beasafe assumption,astheInternetand pay OntarioCT. Increasingly, however, thismay located inOntarioandare therefore liableto . http://www.horizons.gc.ca/en/content/canada-and- Canada andtheChanging 99

grown by roughlyover 160,000 the same period. accounting, computersystemsdesign,etc.)has employmenttechnical services (inareas suchas past decade,whileprofessional, scientificand sector hasseenanincrease of92,000jobsinthe The finance,insuranceandreal estate service producing sectorhasshrunkby 100,000jobs. 700,000 jobssince2007whilethegoods- whole hasseenemployment increase by nearly Indeed, theservice-producing sectorasa in employment inthepastdecadeOntario. These sectorshave seenasignificantuptick law, through theuseofgloballabourplatforms. from informationtechnology tofinanceand across industries,ranging arangeofservice 300,000 jobssince2000 manufacturing sector, whichhaslost roughly In effect, theexperienceofOntario’s also reduce revenues from PIT andsales taxes. could alsoeasilysuppress wages,whichcould are avoided, thethreat ofsuchdigitaloutsourcing not pay taxes inOntario.Even ifmajorjoblosses expensive workers in the developingworld whodo occupations threatened by well-educated,less in arangeofknowledgeindustriescouldfindtheir annually. tv.action?pid=1410035501 ment ofCanada. Table: 14-10-0355-01(formerly CANSIM 282-0088).Govern ally adjustedandunadjusted,trend-cycle, last5months(x1,000) 102 StatisticsCanada. 300000-manufacturing-jobs/. The MowatCentre. https://mowatcentre.ca/how-ontario-lost- manufacturing jobs(andwhymost aren’t comingback).” 101 Dragicevic, N.29,July2014. “HowOntariolost300,000 uploads/2017/12/FutureOfWorkintheGlobalSouth.pdf. ment Research Centre. 12-14.http://www.fowigs.net/wp-content/ (eds). from facilitators into arbitrators” inGalperin,H.andAlarcon, A. freelance laborforce: howglobaldigitallaborplatformschange 100 Beerepoot, N.andLambregts, B.2017.“Reiningintheglobal The Future ofWork intheGlobalSouth 100 Inthiscase,Ontarioworkers engaged https://www150.statcan.gc.ca/t1/tbl1/en/ Employment by industry, monthly, season . 101 couldbereplicated . InternationalDevelop TLDR - . - 102 - , also findthemselves inthepositionofbidding for professionals like engineersandlawyers may be call-centre employees inIndia.Highlyskilled outsourced workers ofthefuture mightnotjust high-quality biddersfrom emerging markets. The to outsource specialized tolow-cost, services challengedasfirmslook could beparticularly Ontario’s job creation successinrecent years, sector,competitive. Theservice whichhasdriven will onlymake thegloballabourmarket more students graduatefrom universities in2017) 22 by 2025) education studentsbetweentheagesof18and (which isprojected tohave 119millionhigher in educationalstandards incountrieslike India The riseofthemiddle-class omy-its-complicated/. edu/blog/future-development/2017/12/13/taxing-the-digital-econ It’s complicated.” E.13December,106 Jakurti, 2017.“Taxing thedigitaleconomy— inside-the-worlds-largest-higher-education-boom-74789. education boom.” 105 Stapleton, K.10April,2017.“Insidetheworld’slargest higher the-largest-student-population-by-2025-study-predicts. tion student populationby 2025,studypredicts.” 104 Bothwell,E.10December, 2015. “Indiawillhave thelargest global_20170228_global-middle-class.pdf. stitute. https://www.brookings.edu/wp-content/uploads/2017/02/ Economy &Development Working Paper edented ExpansionoftheGlobalMiddleClass:AnUpdate.” class willcomefrom Asia.Kharas,H.February, 2017.“TheUnprec 103 88percentofthenextbillionentrantsto theglobalmiddle big dataanalyticsandnetworkeffects are all business models,andtheenablingpowerof of capitalflows,thecreation ofmore multi-sided Increasingly, themobilityoffirms,volatility establishment inagiven jurisdiction. of value creation by afirmwithpermanent tax collection,whichare premised onthenotion pressure on conventional modesofcorporate Around theworld,technologyfirmsare putting JURISDICTIONAL ARBITRAGE INTERNET-ENABLED world. tasks againstworkers locatedanywhere inthe . https://www.timeshighereducation.com/news/india-will-have- 104 The Brookings Institute The Conversation andChina(whichsaw8million . https://theconversation.com/ 103 . No.100.TheBrookings In . https://www.brookings. andincreases Times HigherEduca 106

Global 105

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33 | THE MOWAT CENTRE 34 | ROBOTS, REVENUES AND RESPONSES governments between$100and$240billionUSD lower. Theseactivitiesare estimatedtocost place tootherjurisdictionswhere taxratesare underlying economicactivityactuallytakes from jurisdictionswhere value iscreated and allow multinationalfirmstoshiftprofits away to fillgapsintheinternationaltaxsystemthat Shifting (BEPS)initiative explores opportunities their taxliabilities.ThisBaseErosion andProfit especially digitaltechnologies,by firmstoreduce arising from theuseofnewtechnologies, worked extensively ontheissueoftaxchallenges The OECD, inconjunctionwiththeG20,has facing thischallenge. providers.and service Ontarioisnotalonein would comparablesalesby traditional retailers generatelesssalestaxrevenueservices than the province. Moreover, theirsalesofgoodsand but paying littleornocorporateincometaxin are derivingconsiderablerevenue from Ontario, look athowglobalhigh-techfirmslike Amazon A goodinitialexampleofhowthiscanoccuristo arbitrage. engaging intechnologically-enabledjurisdictional for globalfirmstoreduce theirtaxliabilitiesby combining inways thatcreate newopportunities 2015-information-brief.pdf Page 3. Profit ShiftingProject. https://www.oecd.org/ctp/beps-reports- InformationBrief 2015 FinalReports: 108 OECD. 2015. report_9789264293083-en#page23. org/taxation/tax-challenges-arising-from-digitalisation-interim- Erosion andProfit ShiftingProject. https://read.oecd-ilibrary. 2018:Inclusive Framework onBEPS terim Report 107 OECD. 2018. accounting andlegalstrategies–something advancements andisinsteadtheresult ofclever activity haslittletodowithtechnological Much oftheprofit-shifting ofBEPS portion annually. 108 107 OECD/G20 BaseErosion andProfit ShiftingProject: Tax ChallengesArisingfrom Digitalisation–In . OECD/G20BaseErosion and . OECD/G20Base - On baseerosion, however, governments’ overall taxtreatment. assets unclearinorder togainmore favourable 110 technique called“transfer pricing,” forinstance network ofnationalsubsidiaries–through alegal that derive from theseassetsaround withintheir assets enablesglobalfirmstomove revenues digital firms.Theintangiblenature ofintangible other intangibleassetsthatcharacterizes many than normalreliance onintellectualproperty and oftheseistheheavierOne ofthemostimportant that are exacerbatingthislongstandingproblem. are afew characteristicsofthedigitaleconomy discussed laterinthissection. BEPS, OECD/G20 Base Erosion andProfit Shifting Project 2018: Inclusive FrameworkReport on 111 OECD. 2018. 110 Wooldridge, A.15September, 2016.“TheDarkArts”. the nextsubsection. in adoption hasbeenhighest.Thisconnection isdiscussedfurther has characterized sectors oftheeconomywhere technological between thesetechniquesandthe corporateconsolidationthat strategies. Nonetheless,there isarguably anindirect connection foradiscussionofthese ing-pushing-boundaries-dark-arts report/21707055-superstar-companies-are-good-everything-includ The Economist. 109 SeeWooldridge, A.15September, 2016.“TheDarkArts” sales tax. generate inCanadaorcollectingandremitting without paying CT ontherevenues thatthey toCanadians for firmstosellgoodsandservices being inbusinessCanada.Thismakes iteasy are nowabletodobusinessinCanadawithout themselves inCanada.Inotherwords, manyfirms without having to“permanentlyestablish” jurisdictions toaccesstheCanadianmarket This isenablingfirmsheadquartered inother difficultforthegovernmentvery to regulate. to customersover theinternetinways thatare have theabilitytoprovide goodsandservices to technologicalinnovation. Increasingly, firms revenue concernsare tiedmuchmore directly –ortokeep thelocationofownershipsome https://www.economist.com/news/special- Tax ChallengesArisingfrom Digitalisation–Interim 111 109 Thatsaid,there . Pages 170. . - that thesemissedtaxrevenues are collected. the –oftenlegislative –actionrequired toensure (including CanadaandOntario)have notyet taken understandable thatmanygovernments and territorialgovernments, itisperhaps be dividedbetweenthefederal, provincial Given thattheamountsjustquotedwould avoided paying. in Canada2016,tosay nothingoftheCT they million and$9.4respectively insalestaxes estimates thatNetflixandSpotifyavoided $52 Rosalie Wyonch from theC.D. HoweInstitute headquartered inotherjurisdictions.For example, not paying eitherCT orsalestaxbecausethey are generating significantrevenues inCanadabut providing are digitalgoodsandservices similarly sales taxontheserevenues. and Facebook donotpay eithercorporateor businesses are headquartered elsewhere, Google Because GoogleandFacebook’s advertising or nearly$4billion,of$5.5billioninspending. spending. Combined,thatrepresents 72percent, respectively, ofallCanadiandigitaladvertising and Facebook captured 48and24percent, Asof2016,Google in digitaladvertising. A goodexampleofthisproblem canbeseen pdf#page=137. qc.ca/budget/2018-2019/en/documents/AdditionalInfo_18-19. Additional Information2018-2019 Gouvernement duQuébec.March, 2018. 115 Note,Quebecdoesseemto bemoving inthisdirection: Digital Economy inCanada 114 Wyonch, R.August, 2017. theShatteredMirror.pdf Page 79. Policy Forum. https://shatteredmirror.ca/wp-content/uploads/ Public Policy Forum. January, 2017. should-force-google-and-facebook-to-pay-their-share.html and https://www.thestar.com/opinion/editorials/2018/01/18/ottawa- force GoogleandFacebook to pay theirshare.” 113 TheStarEditorial Board. 18January, 2018.“Ottawashould market. facebook-continue-to-dominate-the-canadian-digital-advertising- Media Canada.https://nmc-mic.ca/news/research/google-and- market. continue to dominatetheCanadiandigitaladvertising 112 NewsMediaCanada.18April,2018. by thefactthatfederal government is complicated In Ontario,thesituationisfurther 114 . C.D. HoweInstitute. Page 9. Bits, Bytes,andTaxes: VAT and the . http://www.budget.finances.gouv. The Shattered Mirror. 113 The QuébecEconomic Plan: Otherfirms Google andFacebook The Toronto Star Public News 115 112 .

DATA ECONOMY TOTHE SHIFT ASERVICE-FOR- corporate taxsystem.” sustainability andpublicacceptabilityofthe create value threatens tounderminethefairness, digital businessesare taxed andwhere they grow the“current misalignmentbetweenwhere not yet trouble governments, astheseamounts up. Whilethesmallamountoflostrevenue may the lostrevenues quicklybegintoadd willvery for anincreasing proportion oftheeconomy, business modelscontinuetogrow andaccount of Ontario.Regardless, ofdigital asthesesorts responsible forcollectingsalestaxonbehalf and Profit Shifting Project. Pages 170-171. 2018: Inclusive FrameworkReport onBEPS, 117 OECD. 2018. tech tax.” BBC. 13March, 2018.“SpringStatement:Chancellor threatens new 116 UK on thevalue AmericanFacebook ofeachNorth network in2015.Anindependentestimatedone about USD$39inadvertising revenues forthe American userswere generatingonaverage Facebook estimatedthateachoneofitsNorth algorithms. to quantify, suchastrainingmachinelearning value ofthatdatacanbe much more difficult used foravariety ofotherpurposeswhere the targeted However, advertisements. itcanalsobe the mostwell-knownuseofthisdataistoprovide the caseofGoogleandFacebook, forinstance, role inthecreation ofvalue by thecompany. obtained from usersatnocharge, itplays avital form ofuser-generateddata.Whilethisdatais remunerated forproviding inthe theirservices they arefor usingtheirservices, stillbeing while GoogleandFacebook donotcharge fees ofbusinessmodel.But examples ofthissort for free. GoogleandFacebook are theclassic Increasingly, digitalfirmsare offering services Chancellor Business Tax ChallengesArisingfrom Digitalisation–Interim . http://www.bbc.com/news/business-43383614. oftheExchequer, PhilipHammond,quotedin 116 OECD/G20BaseErosion 117 In

35 | THE MOWAT CENTRE 36 | ROBOTS, REVENUES AND RESPONSES are providing exchange toGoogleinabarter for ofdatathatCanadianusers billion dollars’worth calculation toGoogle’s activity, that’salmosta amount at48percent. in CanadawhileGooglecaptured twicethat 24 percentofalldigitaladvertisement spending estimated thatin2016,Facebook captured about no meanstheonlyone.Asalready noted,itis place withoutbeingtaxed. Moreover, itisby of almosthalfabilliondollarsinvalue istaking seem problematic thatacommercial exchange forfreea service inexchange afterall–itdoes the datathey are providing –they are receiving sense forindividualstocharge Facebook for CAD $475million. value equivalent ofUSD $372millionorabout this meansthatdatacorrelates withacash than 18.6millionCanadiansasusersin2017, that Facebook isestimatedtohave hadmore This isnotalotofmoney perperson,butgiven $20. cash exchange andcameupwithafigure ofUSD pay individualsfortheirdataifthiswasanormal estimate alsomodelledwhatFacebook would $82. Usingthisnumber, thefirmthatprovided the user in2017peggedtheirvalue ataboutUSD Review March, 2017.“What’sYour DataWorth?” about USD$260peractive monthlyuser. J.Todd, SeeShort, S.3 paid USD$26.2billion,whichworks outto aonetime payment of on data.For example, whenMicrosoft boughtLinkedIn in2016it many othersocialnetworksanddigital businessmodelsthatrely is-your-data-worth-c28488a5812e Worth?” Facebook. Bloor, R.21March, 2018.“How MuchisYour $$$Data morethat usersare onaverage worth to Googlethanthey are to 121 Thisisaconservative estimate.Manyestimatessuggest market. continue to dominatetheCanadiandigitaladvertising 120 NewsMediaCanada.18April,2018. to 1.28CAD. 119 Calculatedon10May, 2018atanexchange rateof1to USD than-you-think/. Loup Ventures. http://loupventures.com/your-data-is-worth-less- 118 Clinton D. 9April,2018. transaction. withoutanytaxbeingappliedtothe a service 118 . https://sloanreview.mit.edu/article/whats-your-data-worth/ Medium . 121 https://medium.com/algebraix-data/how-much- 119 Whileitmay notmake Your LessThanYou DataIsWorth Think 120 Ifweapplyasimilar . Moreover, there are ofcourse MIT SloanManagement Google andFacebook . . market analysesandthefactthatregulators have overwhelming focusonconsumerharmintheir American competitionandanti-trustregulators’ marketplace. Butitalsohas itsroots inNorth abilities tocompeteeffectively inthecurrent business modelsandtherole ofdatainfirms’ and lowmarginal costsfordigitalplatform of networkeffectssuch astheimportance of somefeatures inherent todigitalcommerce, extent, thisconsolidationseemstobetheresult promoting corporateconsolidation.To acertain that technologiessuchastheInternethave for from technologicalchangeisthetendency Another threat togovernment revenues emerging COMMERCIAL CONSOLIDATION amazon-facebook-and-google-and-what-they-can-do www.economist.com/briefing/2018/01/20/the-techlashagainst- Facebook andGoogle—and whatthey can do”. 122 TheEconomist. 20January, Amazon, 2018.“Thetechlash against tools. are gettingbetteratusingthesealready existing firms that,withadditionalresources andcapacity, technological developments are resulting inlarger The difference now, however, isthatrecent technique thathasbeeninuseforsometime. with alowertaxrateisanexampleofsuch a profit isgeneratedtoanother jurisdiction the bookingofprofits from ajurisdictionwhere techniques toreduce theirtaxliabilities.Shifting simply theresult offirmsusinglongstanding on anynewtechnologicalenabler, butratheris ofBEPSactivityisnotbased significant portion As wasmentionedinanearliersub-section,a revenues. concernsforgovernmentwhich poseimportant that commandmassive market shares and firms the riseofanumberglobal“superstar” these analyses. role ofdatatobeableproperly integrateitinto not yet developed sufficient understandingofthe 122 Asaresult wehave witnessed The Economist . . https:// for unfair state aid in the form of artificially low for unfairstateaidintheformofartificially the companypay $14.5 billioninunpaidtaxes Ireland joinedforces toappealanEUrulingthat rates andincentives. For example,Appleand they are inaracetothebottom oncorporatetax taxes. Consequently, manygovernments feel like competition tobetheonejurisdictioncollecting This winner-takes-all situationcreates fierce profits are generatedacross manyjurisdictions. often onlycollectedinonejurisdiction,even if the current system,taxes onafirm’s profits are jurisdictions strivingtoattractinvestment. Under of coordination andcompetitionbetween theresultThis situationisatleastpartially traditional internationalfirms. and 10.1percentcompared to23.2percentfor to consumer)firmsare taxed atratesof8.9 international (businesstobusinessand traditional domesticfirms.Similarlydigital compared tothe20.9percentratepaidby firms are taxed atarateofabout8.5percent one studyfocusedontheEU,digitaldomestic lower thantraditionalenterprises.According to their average effective taxratestendtobefar digital firmsare taxed jurisdiction, by aparticular Consider, forinstancethefactthateven when irish-tax-demand-idUSKCN114211. article/us-eu-apple-taxavoidance/eu-hits-apple-with-14-5-billion- $14.5 billionIrishtaxdemand.” 124 Yun Chee,F. Halpin,P. 29August, 2016.“EUhitsApplewith E.13December,123 Jakurti, 2017. “Taxing thedigital economy.” estimated that30percentofallforeign direct ofmanoeuvresthese sorts becomethatitisnow as othersimilarbehaviours. Soprevalent have to engageinprofit-shifting behaviour –aswell meaning thatthey are muchbetterequipped the bestmanagers,accountantsandlawyers, at findingways toavoid taxes. They canhire Simply put,larger, well-financedfirmsare better an effective taxrateof0.0005percent). corporate taxrates(in2014,thefirmpaidIreland Reuters . https://www.reuters.com/ 123 124 that are paying highercorporatetaxratesisan The impactofprofit shiftingontraditionalfirms out onupto$1.5billionofrevenue. means thattheGovernment ofOntarioismissing $14.8 billionCT revenue collectedin2017,this activity. where they conductlittletonoeconomic to firmsshiftingprofits tolow-taxjurisdictions 4 and10percentlowerthanthey shouldbedue found thatcorporatetaxrevenues are between Indeed, theOECDandG20’sworkonBEPShas Islands, TheNetherlandsandLuxembourg. generated totaxhavens suchastheBritishVirgin shifted from thecountrieswhere they are actually investment isactuallycorporate profits being mation-brief.pdf. Development. https://www.oecd.org/ctp/beps-reports-2015-infor 2015 FinalReports. “Information Brief.” 126 OECD/G20BaseErosion andProfit ShiftingProject. 2015. 125 Wooldridge, A.15September, 2016.“The DarkArts”. a declineinbusinessdynamism–both has coincidedwith,andlikely contributedto, The present trend tocorporateconsolidation negative implicationforgovernment revenues. consolidation hasamore generallong-term in Ontario,thetrend towards corporate firms decidedtolocatetheirheadquarters Finally, even ifanumberofthese“superstar” consequences forCT revenue? by profit-shifting mega-firms,whatmightbethe mega-firms? IfCanadianfirmsare out-competed impacted by thecontinuedgrowth ofthese concentration. HowwillCanadianfirmsbe thereby drivingincreased levels ofcorporate increase theirshares ofglobalcorporateprofits, means impossiblethatthey willcontinueto Amazon, AppleandGoogle by 2040,itisby no predict whatmighthappentomega-firmslike causeforconcern.Whileonecannot important 126 Ifweapplythisfigure toOntario’s Organisation forEconomic Co-operationand OECD/G20 BaseErosion andProfit ShiftingProject 125 -

37 | THE MOWAT CENTRE 38 | ROBOTS, REVENUES AND RESPONSES – thatthere wouldbe. otherwise and critically, lesstaxrevenues from thisgrowth productivity, there willbelesseconomic growth – increases inproductivity andwithoutincreases in becauseinnovationis important isthekey to economy thelessinnovative itwillbe. true atagenerallevel: thelesscompetitive an more innovative itwillbe.Theconverse isalso balance, themore competitive aneconomy, the to thecompetitiveness ofaneconomy. companies exitthemarketplace –iscloselytied at whichnewcompaniesare created andold fall inbusinessdynamism–thatis,therate Canada 130 Qureshi, Z.August, 2016. org/2018/03/is-lack-of-competition-strangling-the-u-s-economy. gling theU.S.Economy?” 129 Wessel, D. March-April, 2018.“IsLackofCompetitionStran edu/wp-content/uploads/2016/08/productivity-outlook.pdf Page 3. versus Optimists 128 Qureshi, Z.August, 2016. the-canadian-economy-losing-its-dynamism/. policyoptions.irpp.org/2015/10/29/the-start-up-slow-down-why-is- the Canadianeconomylosingitsdynamism?” 127 Tapp, S.29October, slow-down”: Whyis 2015.“The“start-up 127 andthewiderwesternworld. . TheBrooking Institute.https://www.brookings. Harvard BusinessReview The Productivity Outlook:Pessimists The Productivity Outlook Policy Options . https://hbr. 130 129 128 . Page 3. This On A . http:// - underground economywas2.4percentofGDP Statistics Canadahassuggestedthatthe disagreement astoitsmagnitude.For instance, standpoint, thoughthere issomesignificant issue forCanadiangovernments from arevenue The underground economyisalready asignificant additional activityintheunderground economy. extent towhichthesenewdevelopments willspur new businessmodelsmay create centres onthe that emerging technologies,globalizationand consider thedisruptionsoflabourmarket A significantconcernforgovernments asthey UNDERGROUND ECONOMY ANDTHE PLATFORMS economy inCanada, 2013.” 131 SeeStatistics Canada.20June,2016.“Theunderground to anoverall estimate. an accountingframeworktoextrapolatefrom this each sectorthatisunderground, andthenapply they make assumptionsabouttheproportion of investigate theunderground economy. Rather, however, asStatistics Canadadoesnotactively figures shouldbeviewedwithsomeskepticism, 2.4 percentofOntario’s GDPin2013. also estimatedtheunderground economytobe for whichdataare available. StatisticsCanada for Canadaasawholein2013–thelastyear 131 These advantage ofthisfeature ofplatformsby entering taxed. Governments have already totake started When transactionscanbetracked, they canbe while traditionaltaxisstilltake cashpayments). and payment ismadethrough acredit card, (e.g., anUberorLyft tripisrecorded digitally economic activitythanwaspossiblepreviously platforms shouldenablemucheasiertrackingof the underground economy. Indeed,intheory, threat togovernment revenues presented by marketplaces —willactuallyreduce the go alongwiththem,suchasonlineplatform technologies —andthebusinessmodelsthat Some suggestthattheemergence ofnew just from tipincomeforwaitstaff. million inlosttaxrevenues atthefederal level — $6 billion.Thiswouldmeanroughly $400-900 figure couldactuallybebetween$2.7billionand (CRA) audit,however, suggestthatthecorrect the results ofanactualCanadaRevenue Agency $750 millionin2008.Extrapolationsbasedon Statistics Canadaestimatedthisamounttobe in thecaseofunreported tipsby waitstaff, these officialfigures suggest. underground economytobemuchlarger than Alternatively, believe someexperts the with-airbnb/article37895386/. com/news/british-columbia/british-columbia-reaches-tax-deal- with Airbnb”. 134 Bailey, I.7February, 2018.“BritishColumbiareaches taxdeal point-ottawa-loses-billions-in-undeclared-income/article4418504/. andmail.com/report-on-business/economy/economy-lab/tipping- in undeclared income.” 133 Tedds, L.16July, 2012.“Tippingpoint:Ottawalosesbillions com/2014/01/30/canadas-underground-economy/. Dead For Tax Reasons 132 Tedds, L.30January, 2014.“Canada’s Underground Economy.” this dealtofundaffordable housing. use the$16millionitexpectstoreceive through and hoteltaxes tothegovernment. BCplansto the platformwilldirectly remit provincial salestax entered intoanagreement withAirbnb inwhich the Government ofBritishColumbia(BC) recently taxes users.For onbehalfofservice example, wherebyinto partnerships platformsdirectly remit The GlobeandMail . https://deadfortaxreasons.wordpress. TheGlobeandMail . https://www.theglobeandmail. 132 . https://www.theglobe For example, 133 134 - including arequirement tocollectandremit sales impose regulations ontheride-sourcing service of QuebecandUberasthegovernment soughtto multiple occasions—betweentheGovernment — Uberhasnowthreatened toleave Quebecon repeated boutsofconflictandbrinksmanship firms willoftenresist, ascanbeseeninthe applied by thegovernment inquestion.Infact, agreements aftersignificantpressure hasbeen the BCGovernment andoftenonlyreach these agreements like theonejustdescribedwith marketplaces donotproactively pursue automatically betaxed. Ingeneral,platform economic activitydoesnotmeanthatthey will marketplaces enablethetracking ofonline Simultaneously, thefactthatplatform drivers/. revenuquebec.ca/en/businesses/sector-specific-measures/uber- For seehttps://www. adescriptionofQuebec’s partnership letter.com/2016/09/will-quebecs-uber-deal-mean-jurisdictions/. mean forotherjurisdictions?” and Dawes,T. 8September, 2016.“WhatwillQuebec’s Uber deal news/3769417/a-look-at-ubers-controversial-history-in-quebec/ versial history inQuebec.” 135 SeeLau,R.26September, contro 2017. “AlookatUber’s $30,000 tonotremit federal salestax. allowed ride-sourcing drivers earninglessthan and cancelledtheexemption thathadpreviously 2017 thefederal government amendedthelaw responsibility ofdrivers toremit salestaxes. In situation intherest ofCanadawhere itisthe ride by Uberonbehalfoftheirdrivers withthe remitted totheQuebecgovernment onevery where QuebecSalesTax (QST)iscollectedand the government. Compare thesituationinQuebec the platformissignificanttaxrevenue lossesfor contractors offering on theirgoodsandservices remit salestaxes onbehalfoftheindependent platform operatorstothemselves collectand Critically, thelikely result ofafailure torequire taxes onbehalfofdrivers. GlobalNews Cantech letter 135 . https://globalnews.ca/ . https://www.cantech - -

39 | THE MOWAT CENTRE 40 | ROBOTS, REVENUES AND RESPONSES will return lessvalue tothegovernment andwill asenforcementbartering, willbemore difficult, a foreign jurisdiction,orfocusedonfacilitating acutely whentheplatformissmaller, orbasedin these problems are likely toariseeven more take thesecompliance-friendlysteps.Moreover, they benefitfrom –itisunlikely thatthey will thesalesofwhich of thegoodsandservices of theseplatformstodoso–itraisestheprice there iscurrently littleincentive forthe operators compliance measures builtintothem.Given that online platformthatdoesnothave tax Similar problems are likely torecur onevery will notdoso. because, onewouldassume,itbelieves thatmost collect ifalldrivers were adheringtothelaw about 25percentofthetaxes thatitwould Canada itselfestimatesthatitwillonlycollect meet them. responsibilities andprovides adviceonhowto where itexplainstodrivers theirtaxremittance drivers. Uber, forinstance,maintainsawebpage drivers behalf–theresponsibility remained with and Lyft) tocollectandremit thesalestaxon a requirement onplatformoperators(i.e.Uber The federal government didnot,however, impose have-a-tax-implication/article4311784/. com/globe-investor/personal-finance/even-barter-transactions- a taximplication.” 138 Cestnick,T. 18,February, 2010.“Even transactionshave barter footnote 12. 137 Wyonch, R.August, 2017.Bits,Bytes,andTaxes. Page 11, sales-tax/. Drivers” https://www.uber.com/en-CA/drive/resources/canada- 136 SeeUberCanada,“SalesTax inCanada–Requirements for such transactions. misconceptions aboutthetaxexempt statusof likely force governments toovercome popular 136 Globe andMail. Nevertheless, theGovernment of 137 138 https://www.theglobeandmail. ledger. ItistruethatBitcointransactionsare in Bitcoinisrecorded inapublicly accessible quite transparent –every transactionever made cryptocurrencies, suchasBitcoin,are actually to popularbelief,however, themostpopular been associatedwithcriminalactivity. Contrary – andespeciallycryptocurrencies –have long evasion. Inpopularconception,crytpo-assets activity, totheunderground economy, totax variety ofusesrangingfrom organized criminal impact ongovernment revenues through a andtheirpotentiallydisruptiveof crypto-assets consideringtheemergingIt isalsoworth role CRYPTO-ASSETS THE EMERGENCEOF crypto-money-laundering. economics/21741190-will-crypto-help-money-launderers-future- The Economist. 141 TheEconomist. 26April,2018.“Cryptomoney-laundering”. tocurrency.html. startups-law-enforcement-agencies-catch-criminals-who-use-cryp Catch BitcoinCriminals.” 140 Yakowicz, W. 9January, HelpingtheFBI 2018.“Startups bitcoin-transactions-arent-as-anonymous-as-everyone-hoped/. Technology Review coin Transactions Aren’t asAnonymousEveryone Hoped.” 139 Emerging Technology from the arXiv. 23August, 2017.“Bit cryptocurrencies, like Zcash andmonero, which crypto-assets. about £3-4billion,were beinglaundered using per centofEurope’s annualcriminalrevenues, agency, recently stated thathebelieved that3-4 Nonetheless, theheadofEuropol, theEU’spolice transactions through theBitcoinblockchain. successful intrackingindividualcriminals’ law enforcement authoritieshave beenhighly tracing whowasinvolved. completely anonymouslywithoutanyway of traditional cashwhere transactionscanoccur This requirement ofanidentitydiffers from transact withBitcoin. identity, even ifitisjustastringofnumbers,to pseudonymous –meaningthatusersneedan https://www.economist.com/news/finance-and- . https://www.technologyreview.com/s/608716/ 141 Moreover, there are newer inc. https://www.inc.com/will-yakowicz/ 139 Consequently,

140 MIT

- - collect thesameamountofrevenue. Inthisway, amount ofenforcement resources needed to government revenues simplyby increasing the widespread useofcryptocurrencies coulderode While by nomeansimpossibletotrack,the offers anexample ofhowthiscouldoccur. government-imposed officialcurrency controls, where they were usedasameansofavoiding of cryptocurrencies inArgentina, forexample, scrutiny asthey move value around. Theuse tools forindividualslookingtoavoid government they could,muchlike cash,becomeattractive tocontinuegrowcrypto-assets inpopularity, individuals,weretransactions toparticular it more difficultforauthoritiestolinkparticular more generally. Becausepseudonymitycanmake take onalarger role intheunderground economy however, to isthepotentialforcrypto-assets not have occurred More otherwise. concerning, lead toanexpansionofsuchactivitythatwould germanetothisreport unlesstheyparticularly aremoney-laundering usingcrypto-assets not proceeds ofcrime,thetaximplicationscriminal Since governments donotusuallytaxthe transactions. are designedtoprovide greater anonymityfor magazine/how-bitcoin-is-disrupting-argentinas-economy.html. New York TimesMagazine 143 Popper N.29April,2015.“CanBitcoinConquerArgentina? dropping-bitcoin-for-another-currency. bloomberg.com/news/articles/2018-01-02/criminal-underworld-is- ping BitcoinforAnotherCurrency.” 142 Kharif,O. 2January, IsDrop 2018.“TheCriminalUnderworld costs ofcollectingtaxrevenues. platforms discussedearlier, namelyraisingthe to theonepresented togovernments by digital couldpresentcrypto-assets achallengesimilar 142 . https://www.nytimes.com/2015/05/03/ Bloomberg Markets . https://www. 143 The - – computerprograms designedtodocertain like thoseprovided contracts” by so-called“smart offeredservices withintheEthereum network, asameansofpurchasingis tousecrypto-assets Moreover, thepurposeofaplatformlike Ethereum assets besubjecttosalestax? question thenarises,shouldthesaleofthese declare themselves nottobesecurities.The attract salestaxes, explicitly othercrypto-assets tokenized securities,wouldlikely notnormally purchased. like Whilesomecrypto-assets, arecrypto-assets themselves thethingsbeing a high-techformofcash.Inmanycases, beyond situationswhere become crypto-assets This concernhasanotherpotentialmanifestation more important. occurring inthesesystemswillbecomemuch tax theincreasingly large movements ofvalue of theOntarioeconomy, thequestionofhowto into thesedigitallynative value systemsand out more andmore economicvalue istransferred contracts they host are alsogrowing rapidly. As the capabilitiesofnetworksandsmart these values are growing extremely quicklyand be ahugeconcernforjurisdictionslike Ontario, like Ethereum orBitcoinisnot yet solarge asto While thevalue beingtransactedonblockchains contracts betaxed? Ifso,indollarsorether? How shouldtheincomegeneratedby thesesmart perspective? Shouldsalestaxbeappliedtothem? likeservices thesebetreated from ataxation token, ether. of How shouldtheperformance computers ispaidforby thenetworksowndigital these programs ontheEthereum networkof like ofrunning aflightcancellation.Theservice automatically whentriggered by anoutsideevent tasks, suchaspay outinsurancecontracts

41 | THE MOWAT CENTRE Redesigning systems to be more adaptive and responsive will not only meet the needs of workers and young people in the future, but also address the needs of citizens today. 42 | ROBOTS, REVENUES AND RESPONSES AND REVENUES 42 | ROBOTS, 6 for humanlabourinsomeoccupationsthrough automation.Nonetheless,wedonotknowtherateat technologies like AIalready have theabilitytoreplicate somehumanfunctionsandeliminatetheneed points thatcouldresult indrasticallydifferent outcomes.For example,weknowthatemerging representdrivers) Criticaluncertainties andwhatisunknown(e.g.,criticaluncertainties). key inflection In buildingtheseplausiblescenarios,itisusefultomapoutwhatknown(e.g.,current trends and conventional wisdomaboutthefuture. which policymakers canengageina process ofcriticalthinkingandchallenging ofassumptionsand designed tobefactualforecasts ornormative visions,butrathertoserve asamechanismthrough that may ariseineach,andconsideringpotentialpoliciesresponse. Theseplausiblefutures are not generally entailsenvisioningvarious plausiblefutures, discussing the challengesandopportunities policymakers asthey worktocraftpossiblesolutionspotentialfuture challenges.Thisapproach jurisdictions around theworld,analysisofplausible scenarioscanbeausefulexercise for When facedwithsignificantuncertainty, asisthecasewhenconsideringfuture ofworkin Plausible futures forOntario’s labourmarket themselves have toinfluencehowthechangeplays out. opportunities Additionally, planningfor plausible futures canalsoilluminatethoseareas where policychangescould policymakers identifythecriticalchoices they willneedtomake andprepare themselves accordingly. impacts ofhigherorlowerratesautomation,the analysisofthesetwoplausiblefutures canhelp futures comes to pass.Bydeveloping scenariosforbothoftheseeventualities, as wellthelikely What thefuture of work actuallylookslike willdependtoagreat extentonwhichofthesetwoplausible could bequitehigh,butitisalsoplausiblethatavariety offactorscouldresult initbeingfairlylow. which automationwilloccurinworkplacesatalarger scale.Itisplausiblethatthisrateofreplacement TOWARDS 2040 FUTURES PLAUSIBLE UNDERSTANDING

43 | THE MOWAT CENTRE 44 | ROBOTS, REVENUES AND RESPONSES similar scenario-buildingexercise undertaken analysis thatfollowsinthisreport buildsona development inrelation toemployment. exercises tohelpthemrethink of thissort policy Other jurisdictions,suchasAustralia,have used Four PlausibleFutures forOntario FIGURE 15 morrowsDigiallyEnabledWorkforce_WEB_160128.pdf. content/dam/acs/acs-documents/16-0026_DATA61_REPORT_To Industrial Research Organisation (CSIRO).https://www.acs.org.au/ tralia over thecomingtwentyyears Workforce: Megatrends inAus andscenariosforjobsemployment 2016. Mason, C.Boughen,N.January 144 Hajkowicz,S.Reeson,A.Rudd, L.Bratanova, A.Hodgers,L. » Degree ofinstitutionalchangeover the next10 » Speedoftechnologicalchangeandadoption inouranalysis: uncertainties was doneby CSIRO, wefocusontwocritical Research Organisation (CSIRO)inAustralia.As by theCommonwealthScientificandIndustrial to 20years (horizontal axis). over thenext10to20years (vertical axis).

Institutional Change Limited . CommonwealthScientificand Tomorrow’s Digitally Enabled 2 1 TECHNOLOGICAL TECHNOLOGICAL INSTITUTIONAL INSTITUTIONAL CHANGE CHANGE CHANGE CHANGE LIMITED LIMITED RAPID SLOW 144 The Technological Technological Change Change Rapid - Slow - environment. out insuchaninstitutional andtechnological revenue identifiedinthelastsectionmightplay this quadrantby askinghowtheeightthreats to change hasoccurred, wefillinthenarrative of technological changeandsignificantinstitutional quadrant thatrepresents afuture inwhichrapid quadrant inquestion.Inotherwords, inthe leading upto2040given thecharacterof previous section,mightplay outintheyears the eightthreats torevenue, outlinedinthe each ofthefourscenariosby consideringhow structurescenario. Inouranalysis,wefurther that eachcorrespond toaplausible future horizontal axes above, creating fourquadrants a continuumrepresented by and thevertical ismappedonto Each oftheseuncertainties TECHNOLOGICAL TECHNOLOGICAL INSTITUTIONAL INSTITUTIONAL SIGNIFICANT SIGNIFICANT CHANGE CHANGE CHANGE CHANGE RAPID SLOW Institutional 4 Significant 3 Change governments are stilllargely uninterested or near a40year low. of overall businessdynamismwhichremains firms hasnotbeenmatchedby anyrebounding remains andtheslowdownininnovation atthebig In fact,significant pause. the entire seemstohave industry essentiallyhit Many ofthesamefirmsstillremain dominant,but has becomemore difficult andcostlytogenerate. inthewaysservices they oncedidasinnovation able tocontinuechurningoutnewproducts and built ontechnologicalinnovation have notbeen diminished markedly. Superstartechnologyfirms had beengettingfasterandshrinkinginsize has Correspondingly, thepaceatwhichcomputers to doubleevery twoyears –hasceasedtohold. can befittedontoachiphasandwillcontinue thatthenumberoftransistors observation 2018 hasslowedsubstantially. Moore’s law–the change witnessedintheyears leadingupto essentially stagnated.Therapidtechnological In thisscenario,thepresent situationhas 145 Tapp, S.29October, slow-down’”. 2015. “The‘start-up and thenewmodesofworking enabledby these poor fitbetweenexisting regulatory frameworks limited growth inthisarea. Barriersarisingfrom a obstacles tolowlevels ofsocialacceptancehave factors rangingfrom unexpectedtechnological outsourcing isthesameinavarietyThe story ofareas. international levels toaddress theproblem. generated. Littlehasbeendoneatthenationalor regardless ofwhere theprofits were originally effective taxratesthrough profits around theworldandinorder tolowertheir giants thatremain. Thesefirmscontinuetoshift unable totake thestepsneededtorein inthetech 1 LIMITED INSTITUTIONALCHANGE SLOW TECHNOLOGICAL CHANGE; continuestoincrease, butvarious commercial consolidation 145 Simultaneously, however, jurisdictional arbitrage Digital

, projected. innovation andrevenue growth thatwere initially to mine,have notyet yieldedthelarge of spurt to themifthey possessedlarge poolsofdata advantages that most firmsbelievedaccrue would data forinsightsusingbiganalytics,andthe collection as themarginal return onincreased this declarationseemstohave beenpremature saw manydeclaringthatdatawasthenewoil, modernize them.Similarly, whilethelate2010s down andthegovernment hasnotbeenkeen to technologies have contributedtothisslow resource-is-no-longer-oil-but-data. economist.com/leaders/2017/05/06/the-worlds-most-valuable- resource isnolongeroil, but data.” 146 TheEconomist. 6May, 2017.“Theworld’smostvaluable about 2020. business model have beeneasilydisruptedby a but onlyslowlyasmostindustriesthatcould working inthe rather slowly. Similarly, theproportion ofOntarians such asretail, butthistransition hastaken place sectors thathadpreviously beenlargely immune, resulted insomejobloss,includingafew jobs. Digitaloutsourcing and employment andknowledge-based stillinservice in 2040thanitdid2018,withthebulkof Ontario’s economydoesnotlookthatdifferent details have changed,theoverall structure of workplaces toadoptthem.Indeed,whilethe it hasnotyet madeeconomic senseformany fallen ashadbeenexpected,withtheresult that of implementingthelatesttechnologieshasnot knock oneffects. Onehasbeenthatthecosts This slowdownininnovation hashadimportant continuestofall.Theabilitymine

gig economy hadalready beendisruptedby The Economist continuestogrow automation platform-based data . https://www. have 146

45 | THE MOWAT CENTRE 46 | ROBOTS, REVENUES AND RESPONSES application, namely, cryptocurrencies. Asa assets blockchain-based technologieslike a significantway, thedisruption created by in While itdiddisruptthefinancialindustry avoid theirobligationsasemployers. business modelstomisclassifytheirworkers to numerous companiesstillmake useofthese of platformbusiness-modeladoptionhasslowed, inaccessible formature workers. Whilethegrowth remains largely unchanged—ill-suitedand EI eligibility, andthetraditionaleducationsystem retraining initiatives are scarce andoftenlinked to qualify forEIwhenthey are outofwork,adequate face. For example,manyOntariansstilldonot to thereality thatmore andmore workers now government programs remain strikinglyill-fitted to adaptlongstandingsocialprograms, most some incremental progress hasbeenmade unemployment andjobchurn.While temporary workforce isexperiencingrepeated boutsof once expected,anincreasing proportion ofthe the joblossesare notaswidespread aswas nature ofworkinameaningfulway. While have stilllargely failedtoaddress thechanging Despite theslowpaceofchange,governments untraceable crypto-assets. transactions are alsobeing carriedoutin increasing proportion ofunderground economy asawaycrypto-assets ofevading taxation.An into proportion of wealth isbeingconverted gradually growing, andincreasingly significant governance. Unfortunately, thismeansthata toimproveor regulatory interventions their technologies themselves, norpursuedanypolicy result, governments have neitheradoptedsuch never fullymoved beyond their original crypto- anticipated –hasreduced revenue contributions job lossestoautomation–whilesmallerthan to inflation.Growth inworker precarity and stagnant andhave lostvalue inreal termsdue Similarly, wageshave remained relatively corporate taxes. have decreased revenue contributionsfrom and smallerprofits from businessesofallsizes provincial economy. Reducedfinancialinflows that innovation hasmadetothegrowth ofthe More surprisinghasbeenthelimitedcontribution expected given theagingofOntario’s population. Overall economicgrowth hasslowed,aswas What doesthismeanforrevenue? and remitted from theseactivitiesnever are. but mostsalestaxes thatoughttobecollected economic activitycarriedoutononlineplatforms, reduce revenue leakageduetoafailure toreport revenues. Somesmallstepshave beentaken to continues toimpingeonprovincial government Finally, persistent underground economicactivity not asmuchsomehadexpected. from personalincome andpayroll taxes, though result ofanunbundlingtraditionaljobsinto been created by technologicalchangeare the occupations, manyofthenewjobsthathave technology hascreated someexciting new forced inthe toparticipate the proportion ofworkers whofindthemselves These changeshave onlyaddedtothegrowth in global platforms. have beenlostto substantial growth over the15years priorto2018 based occupationsinwhichOntariohadseen Moreover, andknowledge- manyoftheservice law, jobs). andinsurance(i.e.,“white-collar” paid occupationsinsectorssuchasbanking, has disruptedmanygood-qualityandhighly- impact onthelabourmarket. InOntario,AI in theworkplace,whichhashadanimportant enabled significantamountsofnew train humanlabourformanytasks.Thishas affordable forfirmstouseAIthanrecruit and costs have fallensufficiently, thatitisnowmore technology have advanced farenough,andits In thisscenario,thecapabilitiesofnew ing-anytime-anywhere-the-effects-on-the-world-of-work. https://www.eurofound.europa.eu/publications/report/2017/work the worldofwork. G. Wilkens, M.2017. 148 Messenger, J.Llave, O. Gschwind,L.Boehmer, S.Vermeylen, white-collar-work/. technologyreview.com/s/609337/is-technology-about-to-decimate- mate White-CollarWork?” 147 Knight. W. 6November, 2017.“IsTechnology Aboutto Deci out thosetasksthatstillneedtobedonein enabled firmstounbundlejobsandcontract the growth indigitaloutsourcing, they have also and augmentedreality technologies –suchastelepresence andvirtual development ofinformationandcommunication Indeed, whilehybridtaskingandthefurther multiple tasksasaresult ofhybridtasking. 2 LIMITED INSTITUTIONALCHANGE RAPID TECHNOLOGICAL CHANGE; Eurofound andtheInternationalLabourOffice. Working anytime,anywhere: Theeffects on 147 digital outsourcing MIT Technology Review 148 –have contributedto gig economy automation . https://www. through . While -

- stitching togethergigswiththeminimalrewards just toearnaliving,eitherasgigworkers orby workers mustnowworkonmultiple platforms meanthatmany employment opportunities change accelerates.Dwindlingtraditional roleimportant inpeoples’lives astechnological business models This isonlyoneexampleofhow amount tomuchlessthanalivingwage. paid forthisnewformofpieceworkgenerally marketplaces. Unfortunately, thecommissions Ontario through agrowing numberofplatform ing Nature ofWork 149 Policy Horizons Canada. 1 May, 2016. engaged inastandard employment relationship. an increasingly large have cohort never been are strugglingtore-enter thelabourmarket while large swathofOntarianshave losttheirjobsand workers have become incredibly vulnerable:a and thereality ofworkintheprovince. Many growing gapbetweenOntario’s socialprograms with theresult thatthere continuestobea institutional changeinresponse hasbeenlimited Despite theseincreasingly wrenching changes, of the undergroundnow essentially a part economy. economic activitytaking place on these platforms is generated on theseplatforms, much of the income sales taxes orprovide third reporting of party foreign-owned platformstocollectandremit because government hasfailedtoforce these increasingly vulnerablepositions.Moreover, more andmore workers findthemselves in enjoy muchgreater remuneration andfreedom, capital andsomehighlyskilledworkers now effect onthelabourmarket: whileownersof providers.or service Thishashadapolarizing that flowfrom producing dataforplatforms

. are playing anincreasingly Canada andtheChang platform 149

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47 | THE MOWAT CENTRE 48 | ROBOTS, REVENUES AND RESPONSES Apple, Alphabet,Facebook andAmazon are still giants have cometodominatemostindustries. commercial consolidation acceleratedglobal collaboration. Thishasfurther issue hasfailedtoproduce significant global promising internationalcooperationonthis regulation minimizationstrategiesasinitially ofthesetaxand remains part animportant data analyticsandAI. legal structures through the useofadvanced big loopholes andtake advantage oftaxationand firmstofind ability ofahandful“superstar” new technologieshave alsostrengthened the In additiontoreducing theirneedforworkers, the rightskillsforthishigh-techlabourmarket. colleges have grown outdatedanddonotprovide diploma programs atOntario’s universities and situations. Even ifitwas,traditionaldegree and an optionformanyduetochallengingfinancial obsolete. workers whoseskillshave suddenlybecome challengetomatureThis posesaparticular employment relationships are increasingly rare. new worldofworkwhere traditionalstandard that doexisthave notadjustedadequatelytothe Those retraining andskills development initiatives tion/. com/2018/04/02/tech-monopolies-small-businesses-competi ington to Take ontheTech Monopolies.“ 151 Taneja, It’sTimeforWash H.2April,2018.“Commentary: nity-of-an-ageing-workforce. https://pursuit.unimelb.edu.au/articles/the-challenge-and-opportu ofanAgeingWorkforce,”portunity 150 GahanP. andHealyJ.6March, 2017.“TheChallengeand Op decisions ofthesefirms. vulnerabletotheoftenarbitrary making themvery andruntheiroperations,thus and services these platformsfortheabilitytoselltheirgoods smaller businessesnowrely almostentirely on seen asoutsidetheirscope.Moreover, many as retail —whichwere andservices previously step intoothersectors—inAlphabet’scase,such large Chinesefirmsaswell.Allhave taken abig leading thepack,buthave beenjoinedby several 150 Returningtoformaleducationisnot Jurisdictional arbitrage 151 Pursuit: University ofMelbourne asahandfuloftech Fortune . http://fortune.

- - . - - get boughtby thedominantfirmsanyway. These aspiring competitors–manyofwhomeventually has increased thegap betweenthemandtheir even more datafrom them. attractmorebetter services, usersandgather develop betterAIwhichhasenabledthemtobuild as thissuperioraccesstodatahashelpedthem giants hascreated somethingofaviciouscycle initiatives. have beenonlythefirstofanumbersimilar own private cryptocurrency in2020turnsoutto within thatsystem.Facebook’s launchofits exchanged forcredit thatcanonlybespent economic systemswithinwhichdatais and more platformfirmsare creating closed of The importance data/#48dbcf124f6d. nardmarr/2017/06/09/why-ai-would-be-nothing-without-big- out BigData,” 153 Marr, B..9June,2017.“WhyAIWould BeNothingWith chain-report-david-marcus com/2018/5/11/17344318/facebook-cryptocurrency-token-block launch itsowncryptocurrency.” C.11May,152 Gartenberg, 2018.“Facebook plansto reportedly values systems,suchasnational currencies, significant economicvalue outoftraditional the case.Thishasresulted intheshiftingof more usefulandattractive thanwaspreviously the development of Finally, technologicalinnovation hasresulted in large ofGDP. portion problem asthesefirmsrepresent anincreasingly avoiding taxes. Thishas becomeasignificant structures andlegalarrangementsasmeansof use ofincreasingly sophisticatedcorporate such asAI,usedby thesegiantstocountertheir ways toleverage thesametechnologicaltools, Moreover, governments have alsofailedtofind and transparency ontheiruseofalgorithms. attempts by governments to imposeregulations and successfullyblocking–albeittentative – restricting accesstotheirhugereserves ofdata, giants have alsobecomeincreasingly opaque, Forbes 152 Thewealthofdataheldby thetech . https://www.forbes.com/sites/ber data crypto-assets hasgreatly increased The Verge 153 Thisadvantage . https://www.theverge. thatare much - - - contributions from personalincomeandpayroll has alltranslatedintoasignificantdrop in small staffgiven theireconomicweight.This and dooffer high-qualityjobshave exceptionally worked. Thetechnologygiantsthatare thriving employment churnleadingtofewer totalhours working tendtoexperiencegreater precarity and fewer peopleare working,andthosewhoare to technologicaladvancement meansthat desperately needed.Eliminationofjobsdue funds tobolsterthesocialsafety netare with ashrinkingrevenue baseatatimewhen Governments inthisscenarioare leftgrappling What doesthismeanforrevenue? and reach oftheCRA. digitally native systemsbeyond theknowledge assets asameansofmoving theirwealthinto many wealthyOntariansare even usingthese shifting intotheunderground economy. Indeed, increased theamountofeconomicactivity hassignificantly of untraceablecrypto-assets sector, however, andthewidespread adoption to devise effective regulations forthecrypto- Bitcoin orEthereum. Governments have failed and intonewdigitallynative systemslike omy-is-thriving-so-are-you-contributing/. https://globalnews.ca/news/2773718/canadas-underground-econ ground economyis thriving. Soare you contributing?” 154 NationalOnlineJournalist.21 June,2016.“Canada’s under taxation almostentirely. increasing numberare successfully avoiding an platforms andtheiruseofcrypto-assets, economy duetotheirworkonpoorlyregulated of Ontariansengagedintheunderground taxes. Moreover, witharapidlygrowing proportion 154 Global News. - -

the province, littletonocorporatetaxispaid despite generatingconsiderableprofits within littleofthisprosperityvery benefitsOntario: profits asashare ofglobalincometogrow, but minimal taxes. Thishasenabledcorporate legal structures toensure they needpay only build themselves sophisticatedcorporateand are nowabletoafford toexploitloopholesand mean thateven medium-sized corporations corporate taxation.Moreover, advances inAI jurisdictions tolowertheireffective rateof these firmscontinuetoshiftprofits between which they are responsible while,simultaneously, capital are expandingtheproportion ofGDPfor as large techcorporations with highlymobile Furthermore, CT contributionsare declining ticles/2018/04/01/taxation-bitcoin-global-challenge. for taxauthorities.” 155 Cooper, C.1April 2018.“Bitcointaxation:aglobalchallenge created andexchanged inthesecontexts. to capture potentialrevenue from thevalue makes itexceptionally difficultforgovernments and untraceabledigitaltransactions,which to thefire isthegrowing useofcryptocurrencies as reductions insalestaxes. Similarly, addingfuel both corporateandpersonalincometaxaswell in nationalcurrencies. Thisleadstodeclinesin closed systemswhere value isnotdenominated social mediaplatforms,are takingplacewithin economic activity, suchascontentcreation on because ofhowanincreasing amount of are escapingthescrutinyoftaxauthorities Finally, many activitiesthatoughttobetaxed profitable mega-firms. the provincial government by theseextremely CPA Australia. https://www.intheblack.com/ar 155 -

49 | THE MOWAT CENTRE 50 | ROBOTS, REVENUES AND RESPONSES the increasing government attentiontoand the underground economy, especiallygiven economic activitysusceptibletomigrationinto platforms levels off,sotoodoesthelevel of level occurringon ofeconomicopportunity platform modelare lefttobedisrupted.Asthe models, asfewer industriesamenabletoa has stagnatedthegrowth of The relative slowingoftechnologicalchange Kitchener-Waterloo andOttawahome. callToronto,banking andconsultingservices, technology firms,aswellfirmsinsectorslike scene.Anumberof globallyrelevanttech start-up incubation have paidoff–Ontariohasabooming focusedonaccelerationand strategic efforts Investments inresearch anddevelopment and results from thisisshared widely amongcitizens. and theeconomicgrowth andprosperity that in AIandotherformsoftechnologicalinnovation, disruption. Canadahasbecomeagloballeader series ofpublicpolicyresponses totheresulting consistent technologicalinnovation alongwitha In thisscenario,Ontariohasseengradualand dor-among-top-20-worldwide. therecord.com/news-story/8398212-toronto-waterloo-tech-corri among top 20worldwide.” 156 Pender, T. 17April,2017.“Toronto-Waterloo techcorridor outsourced, remain relatively untouched. occupations thatmanywere concernedwouldbe for them.Asaresult, anumberofmiddle-skill significant animpactaswasinitiallypredicted andaugmentedrealityvirtual –from having as prevent newtechnologies–suchastelepresence, continues toincrease, butunexpectedobstacles regulation ofthesemarkets. 3 SIGNIFICANT INSTITUTIONALCHANGE SLOW TECHNOLOGICAL CHANGE; Waterloo RegionRecord Digital outsourcing platform . https://www. business 156 -

was thecaseformanufacturinginyears prior, automation inthesesectorshasbeenslowerthan in socialacceptancehasmeantthattherollout of However, regulatory challengesandslowgrowth shrunk asroutine taskswere replaced by AI. retail inevitablytransportation, andsomeservices phenomenon. Employment insectorssuchas to sectorsthatwere previously immunetothis routine tasks,andjoblosseshave indeedspread have replaced jobs thatprimarilyconsistedof market. Aswasforecasted, disruption anddisplacementinthelabour Technology has,ofcourse,causedsome – andstrong workingrelationships between development toprepare them foranewcareer forretrainingaccess toopportunities andskills economic transformation have hadeasy job lossfrom technological changeand useful. For example,thoseexperiencing Other initiatives have proven muchmore withdrawn afteronlyafew years. implement proved unworkable andwasquietly Ultimately,distorting. thelimitedtaxthatwas being costly, unworkable andeconomically vehemently protested for againstby industry For example,arobot taxwas considered but there have alsobeenfailures inthisregard. automated future across theeconomy, though attempts tosmooththetransitionamore resulted inmanysuccessfulgovernment Indeed, significantinstitutionalchangeshave with highpublicsafety requirements. areas, suchasdriving,hasoccurred graduallyand helped toensure thatautomationinsensitive creation ofstringentregulatory frameworks has response. Moreover, government’s proactive allowing ampletimeforaneffective government

automation andAI to exitthegigeconomy, butgigworkisnow their families.Manygigworkers wouldstillprefer providing stabilityandsecurityforworkers and in smoothingoutincomebetweenjobsand policy initiatives thathave largely succeeded government tograduallydevelop aseriesof and manageablepace.Thishasenabled increase, theincrease hasoccurred atamoderate While thenumberof the labourmarket upongraduation. match thosethatare indemandwhenthey enter at graduateandundergraduate levels sufficiently ensure thattheknowledgeandskills developed educationinstitutionsandemployerssecondary collaboration andcooperationbetweenpost- than asinglelifetime profession. and setexpectationsformultiplepathsrather a widerangeofpotentialcareer trajectories and transferrable skillsthatprepare themfor From theearlieststages,studentsdevelop soft and evolved alongsidetheshiftinglabourmarket. –have andpost-secondary keptsecondary pace Educational institutionsatalllevels –primary, accessible andaffordable forallOntarians. organizations have enabledtheseinitiatives tobe governments, employers andcommunity these-are-the-skills-employers-want. weforum.org/agenda/2017/03/in-the-workplace-of-the-future- are theskillsemployers want.” 157 Sander. L.7March, 2017.“Intheworkplace ofthefuture, these a floorforOntarioworkers during theinevitable pension systems.Thesenewprograms provide wage insuranceandthestrengthening ofpublic and dentalcare programs, theintroduction of through thecreation ofuniversal pharmacare relationships wasmostkeenly felt, namely the lackoftraditionalstandard employment up toprovide greater inareas support where a large extent,theresult ofgovernments stepping workers inthesector. Thisevolution hasbeen,to at leastasustainablecarrieroptionformost gig workers World Economic Forum continuesto 157 Ongoing . https://www. to collectandremit taxes foruserslocatedin with majorplatformstoshare incomedataand contractors). Lawsandnegotiatedagreements classification (e.g.employees orindependent toworkerssupports regardless oftheir employee require corporationstoprovide relatively equal crucial –suchaslabourlawchangesthat Other institutionalreforms have alsobeen the worldtoOntario. have enticedtoptalentandcapitalfrom allover and diversity andawelcoming business climate sector, liveable safe cities,aculture oftolerance inOntario’swork opportunities boomingtech At theotherendofincomespectrum,decent times oftransitionthatcharacterize gigwork. spread of regulations similartotheEU’sGeneral problem, more active anti-trust agencies,the While the marginal return onincreased the marketplace, theirgrowth hasslowed,as are abletomaintaincommandingpositionsin innovation thatthey once achieved. Whilethey age tomaintaintheconsistentlyhighlevels of to grow, butthey have founditdifficultasthey Innovative firmshave “superstar” continued outsourcing inthesesectors. measures have beenusefulincombatting digital thantheyprices fortheseservices needto,these as banking)may meanOntarianspay higher work, andthoseof“strategicimportance” such sensitive” functionssuchaslegalandmedical outsourced inotherjurisdictions(e.g.“uniquely functionsthatarecertain increasingly being while “residency requirements” putinplacefor have sprunguptofilltheseniches.Similarly, but inmostcaseslocalversions oftheseservices notbeingavailableservices legallytoOntarians, in someplatformsleaving theprovince andsome underground economy. Theselawshave resulted Ontario have helpedcapture revenue from the commercial consolidation remains a data collection .

51 | THE MOWAT CENTRE 52 | ROBOTS, REVENUES AND RESPONSES collect andremit salestaxaccordingly. Getting on business”inCanada,andare required to the internetare nowconsidered tobe“carrying firms sellingintangiblegoodstoCanadiansvia has helpedaswell,withtheresult thatforeign recommendation toamendtheExcise Tax Act Erosion andProfit Shifting(BEPS)workinggroup behaviour. Canada’s adoptionoftheOECD’sBase forfirmstoengageinthis reducing opportunities to take alarger internationalleadershiprole in successfully pressed thefederal government of simplyavoid taxes. using jurisdictionalarbitragetoevade instead and AItoidentifyfirmsindividualsthatare Ontario hasbeguntousebigdataanalytics itself. opposite trend toassert isnowstarting this trend haslargely runitscourse.Infact,an been enabledby thearrival ofnewtechnologies, To theextentthat leading upto2025. consolidation thatcharacterized the40years all combinedtohaltthetrend towards greater emergence ofdigitallynative value systems,have decentralization oftheInternetenabledby the the world,andincreasingly significant Data Protection Regulation(GDPR)across artificial-intelligence-to-battle-tax-evasion.html. nytimes.com/2015/10/10/business/computer-scientists-wield- ligence to Battle Tax Evasion.” Intel 158 Browning, L.2015.“ComputerScientistsWieldArtificial allowed governments tocatchuptheearlier energy –have notyet occurred. Thishas disruption ofotherindustries–suchas continuesbutanticipated financial industry a gradualprocess. Assuch,disruption ofthe of blockchain beyond remains crypto-assets promise, thedevelopment ofnewapplications Finally, despitesignificantexcitement and progress, however. the profits they derive inOntarioisstillawork them topay corporatetaxes commensuratewith jurisdictional arbitrage 158 TheNewYork Times Theprovince hasalso . https://www. had - businesses and services – such as crypto-legal –suchascrypto-legal businesses andservices assets hassparked aclusteringofcrypto-focused to regulators. Theeffective regulation ofthese obligations andprovide third reporting party customers inmeetingtheirtaxandotherlegal in Ontario,whichare required toassisttheir through well-regulated crypto-exchanges based inanaccreditedto participate crypto-market Retail investors intheprovince are nowable inOntario. which hasledtoasmallcrypto-boom a level industry, tothecrypto-asset ofcertainty the law. thus makingiteasierforinvestors tocomplywith some ofthemore establishedcryptocurrencies, accepting payment oftaxes denominatedin innovations inthissectorandOntariohasbegun reinvent-itself. finance-and-economics/2018/02/24/a-banking-centre-seeks-to- to reinvent itself.” 159 TheEconomist. 24February, 2018.“Abankingcentre seeks by ensuring thatallworkers, regardless oftheir and growth inthereformed labourmarket. Indeed, activity have largely beenoffsetby thestrength of as aresult ofjoblossandunderground economic capital. AnticipateddeclinesinPIT andpayroll tax – hasincreased theinflowofglobaltalentand tolerance andawelcomingbusinessenvironment – combinedwithOntario’s reputation fordiversity, Proactive government workers policiestosupport government revenue. has inturnhelpedtoensure stablelevels of and increasing entrepreneurship inOntario,which resulted inasurprisinglyrobust labourmarket social safety nettoitscitizens. Thisinturnhas empower government toprovide amore robust CT contributionshasprovided sufficientfundsto Greater revenue derived from PIT, payroll taxand What doesthismeanforrevenue? as aglobalcrypto-hub. –thathasenabledTorontoexpertise toemerge 159 Newregulations have alsoprovided The Economist . https://www.economist.com/ capture revenue through corporatetaxes inaway treaties have enabledgovernments tobetter requirements andprogress oninternationaltax targeted taxavoidance andevasion. Enforceable domestically andinternationallyhave successfully Furthermore, greater coordinated efforts to ensure relative stabilityintheserevenues. compensated fortheselossesandhave managed gains inCT revenue from newsources have largely notbeinglegallyavailableservices inOntario–the province –andeven somepopularover-the-internet resulted insomehighprofile departures from the comprehensive approach tocorporatetaxationhas quite farsighted.Whilethismore aggressive and activity thatwasoccurringonlinehave proven to capture theincreasing proportion ofeconomic taken by Ontariotoensure itstaxregime wasable have beenexpectedonlyafew years ago.Thesteps Similarly, CT contributionsare stronger than of universal pharmacare anddentalcare programs. previously provided toemployees given thecreation benefits packagesthattraditionalemployers had This relief wascomplementedby reductions inthe lighten the load ontraditional employers somewhat. by thetaxregime, thegovernment wasableto designation, were beingtreated relatively similarly beps-measures-against-tax-treaty-abuse.htm. oecd.org/tax/treaties/further-progress-made-in-implementation-of- tation ofBEPSmeasures againsttaxtreaty abuse”. 160 OECD. 15December, progress 2017.“Further madeinimplemen value beingcreated intheseenvironments. of capturinganappropriate share oftheeconomic dollars hasenabledittoensure thatitiscapable taxes denominatedinformsother thanCanadian the government’s willingness tobegincollecting initially difficult,engagementwithplatformsand available loopholes. global techcompaniestookfulladvantage of that they were unabletoforyears prior, when 160 Moreover, thesuccessful, if OECD both . http://www. might -

53 | THE MOWAT CENTRE 54 | ROBOTS, REVENUES AND RESPONSES that involve workingcloselywithtechnologyand Critically, manyofthesenewoccupations–jobs media marketer tosearch engineoptimization. cover a varietyfrom ranging of occupations social facilitation –alabelthatinitiallyemerged to occupation ofcomputer-humaninterface science andengineeringaswellinthegrowing were previously unheard ofinareas ofcomputer change hasalsocreated numerous jobsthat health care. Ontheotherhand,technological untouched occupationssuchaslaw, financeand accelerated thedisruptionofmanypreviously immune. Furthermore, unexpected sectorsthathadpreviously seemed andretail,inevitable, suchasservice andinsome losses –bothinsectorswhere thisseemed the workplace.Thishascreated significantjob which hasledtowidespread automationin and otherformsoftechnologicalinnovation, pace. CanadahasbecomeagloballeaderinAI while institutionalchangeshave largely kept of newtechnologieshasdrasticallyincreased In thisscenario,advancement andadoption as telepresence and augmented andvirtual introduction ofnewtechnologicaltools such firms, atrend thathasalsobeenboostedby the helped tosustainthegrowth ofonline increased availability ofgigworkers has,inturn, of thetrend towards contributed toandenabledthecontinuation contributes toGDP. Thisjobchurnhasboth by individualsandadrop intheshare thatlabour led toanoverall declineinaverage hoursworked turnover andtheneedforworkers toadapthas them inspacesofonlyafew years. Thisrapid rapid technologicalchangecreates anddestroys daily functionswithAI–are quiteprecarious as use hybridtaskingsothatworkers share their 4 SIGNIFICANT INSTITUTIONALCHANGE RAPID TECHNOLOGICAL CHANGE; gig employment digital outsourcing . The platform has

law reforms have forced companiestotake misclassification remains aproblem, labour located inOntario.Moreover, even ifworker and remit taxes onbehalfofthoseworkers the government nowrequires platformstocollect government hasresponded actively. For instance, Faced withthesetrends, theprovincial more informal. worker classificationstokeep workarrangements these platformfirmscontinuetousealternative economic activityontotheirplatforms.Manyof reality whichfirmshave usedtoshifteven more economist.com/sites/default/files/learning_and_earning.pdf. onLifelong Education.”Special Report 162 TheEconomist. 14January, 2017. “LearningandEarning: images/0024/002429/242996E.pdf. search andForesight Working Papers. http://unesdoc.unesco.org/ Scientific andCulturalOrganization (UNESCO)Education Re Kind ofLearningforthe21stCentury? 161 Scott,C.L.14November, 2015. forlifelongon buildingsupport learning. focuses muchmore skills” on“21stcentury government’s approach toeducation sothatit benefitsschemesandare-vampportable ofthe of wageinsurance,government sponsored workers whichhave includedtheintroduction toreform systemfor been efforts thesupport labour market. More successful,however, have as robot taxes, toaddress automationinthe enforced anumberofinstitutionalchanges,such provincial andfederal governments have also and banking.To degrees varying ofsuccess,the such asmedicineandsomeareas ofthelaw or “uniquely sensitive”as “strategically important” residency requirements foroccupationsviewed digital outsourcing, Ontariohasalsoimposed of thepotentiallyharmfulconsequences among allworkers. Moreover, tooffsetsome has gonesomeways toleveling theplaying field working underalternative classificationswhich on someadditionalresponsibilities forthose

UnitedNationsEducational, The Futures ofLearning2:What The Economist. https://www. 162 161 - and jurisdictional arbitrage the internationalstage – on leadership role for incombattingopportunities in pressing thefederal government totake a tax avoiders. Ontariohasalsoledtheprovinces loopholes andtocatchtaxevaders andmonitor big dataanalyticsandAItoidentifyclose developments by usingthesame tools–namely Ontario hasattemptedtocountersomeofthese data from theseconsumers. which enablesthesefirmstocollecteven more firms’ closedonlineplatformsystems,acondition these credits canonlybeusedwithinthosesame data inexchange forspecial“credits.” Ofcourse, to enticeconsumersprovide themwiththeir that moreso important more and firmsare seeking firms’ businessmodels.Infact,dataisbecoming of The importance for thesefirms created anothersignificantcompetitive advantage This accelerated into usingadvanced bigdataanalyticsandAI. ability toinvest significantamountsofcapital arbitrage the taxsystemandtoengagein tech firmstoidentifyandexploitloopholesin Since about2020,theabilityoflarge dominant reams-data-help-them-spot-and-buy-young-firms-might. com/news/business/21743287-big-rich-and-paranoid-they-have- ing life tough forstartups.” 163 TheEconomist. 2June,2018.“Americantechgiantsare mak through early“shoot-out” acquisitions. eliminate future competitorsbasedinCanada to make itmore difficultforglobaltechfirmsto the federal government toaltercompetitionlaws under theGDPR.Similarly, Ontariohaspressured around required dataportability offirmsintheEU and hasreproduced manyoftherequirements onbusiness”inCanada what constitutes“carrying OECD’s recommendation toamenditsdefinitionof tax treaties. Aswell,Canadahasadoptedthe multilateral in theformofanumberimportant fruit an initiative whichhasbornesomeimportant hasbeenstrengthened by theirunique vis-à-vis commercial consolidation data The Economist. smallerones. hasonlygrown formost http://media.economist. jurisdictional 163 asit - former taxhavens have reinvented themselves just asnewchallengeshave emerged. Several have beenfairlyeffective, they have arrived Nevertheless, whilethesegovernment initiatives taxed directly. lieu ofhaving thedatacollectionthey doinOntario annual lumpsumpayments from platform firmsin Government ofOntariohasbeguntonegotiate and conditionsforuseofservice. with platformsonbehalfofuserstosetterms to enabledata-provider unionswhichnegotiate America passing thefirstlegislationinNorth responses tothedata-driven economy, suchas the way intrialingavariety ofnewandcreative Ontario hasalsobeensuccessfulinleading See https://e-resident.gov.ee/. program, thoughthey have taken theprogram’s logicmuchfurther. 165 Theseinitiatives were largely inspired by Estonia’s e-residency University Press. ism anddemocracyforajustsociety. Princeton; Oxford: Princeton 164 Posner, E.andWeyl, E.RadicalMarkets: Uprooting capital tomake.finally started jurisdictional arbitragethatgovernments had erase muchoftheprogress onchallengeslike which alsooffer lowtaxratesfor“citizens” –may are already concernedthattheseinitiatives – While stillquitenewandexpensive tojoin,many registration andresidency through the Internet. official documentslike andcorporate passports, theprovisionfinancial andbusinessservices, of such ascurrencies, accesstobankingand citizenship by offering “governance services” to competewithterritorially-basedformsof these offers ofdigitalcitizenship are designed andaugmentedrealityvirtual andblockchain, new technologieslike enhancedtelepresence, new formsof“digitalcitizenship.” using blockchain technologytooffer competitive 165 164 Marriedto Aswell,the -

55 | THE MOWAT CENTRE 56 | ROBOTS, REVENUES AND RESPONSES offset thepotentiallynegative consequencesof programs toprovide for workers support and greater government expenditure onvarious Significant institutionalchangehasmeant What doesthismeanforrevenue? Ontario. boomin This hasresulted inacrypto-industry customers inmeetingtaxandlegalobligations. through regulated crypto-exchanges thatassist in anaccredited market incrypto-assets within theprovince are nowabletoparticipate degree tothe industry: ofcertainty retail investors to regulate hasalsoprovided crypto-assets a comply withexistinglaws.Government action making iteasierforinvestors to incrypto-assets of themostwidelytradedcryptocurrencies, beginning tocollecttaxes denominated insome The Government ofOntariohasresponded by value systems(e.g.,BitcoinandEthereum). systems (e.g.,Canadiandollars)todigitallynative of economicvalue tobemoved from traditional innovations have causedincreasing amounts useful thanwasthecaseinyears prior. These blockchain technologythatare significantlymore in newformsof Finally, technologicaldevelopments have resulted played a large role in maintain the relative revenue has the activitydenominated incrypto-assets, activity occurringononline platforms,aswell found ways totaxmore ofthepreviously untaxed taxes overall. Thefactthatthegovernment has reductions inPIT andpayroll tax,aswellsales workers haslargely constrainedthepotential of unemployment andunderemployment for changes whichhave helpedlimittheduration declines inPIT andpayroll tax.However, policy job lossestoautomationhave ledtosmall this. Precarious workarrangementsand requiring significantrevenue inflowstosustain the changingnature ofworkandtheeconomy, crypto-assets andapplicationsof economic systems.Itisdifficultforgovernments actually occurringwithinplatformfirms’closed to measure muchoftheeconomicactivitythatis problem asitisbecomingincreasingly difficult The underground economycontinuestobea position. state ofconstantinnovation justtomaintainits now andrequire thegovernment tobeina arising withmuchgreater speedandfrequency revenue integrity, suchas“digitalcitizenship,” are all thisprogress, challengestogovernment stream forthegovernment. Nevertheless, despite has created, atleastfornow, anewrevenue adoption ofdatapayments inlieuofdatataxes integrity thathasbeenachieved. Moreover, the underground economyremains openfordebate. frameworks. Becauseofthis,even thesize ofthe other jurisdictionsthathave more laxregulatory throughcrypto-economy exchanges basedin inthe many Ontariansstillchoosetoparticipate to beanonymousanduntraceable.Moreover, designed being transactedusingcrypto-assets proportion of underground business isstill through Ontario-basedexchanges, alarge cryptocurrency activityisnowbeingregulated size. Moreover, while significantamountsof if thepayments are actuallyanappropriate to cover ofactivity, thissort itisdifficulttoknow payment agreements withsomeofthesefirms have successfullynegotiatedannuallumpsum for taxpayment purposes.Whilegovernments and whichthegovernment doesnotaccept are nottradableoutsideofthefirm’s platform introduced theirowncryptocurrencies which firms, especiallytheoneswhere firmshave to value thetransactionsoccurringonthese Greater coordinated efforts both domestically and internationally have begun to successfully target tax avoidance and evasion, although it is a work in progress. Federal and provincial action has enabled government to better capture revenue through corporate taxes in a way that they were unable to for years prior, when global tech companies took full advantage of available loopholes.166 CT revenue remains relatively stable at the moment, although jurisdictional arbitrage continues to be a problem, and it is unclear if institutional change will be able to continue keeping pace with technological change and shifting corporate structures over the longer term. Indeed, “digital citizenship” initiatives have not yet resulted in significant tax losses, but they do loom as a potential threat on the horizon.

166 OECD. December 15 2017. “Further progress made in imple-

mentation of BEPS measures against tax treaty abuse”. CENTRE 57 | THE MOWAT Governments that can deploy modern service delivery frameworks effectively will be well-positioned to maximize their resources, free up staff for higher-value tasks and deliver services that achieve their intended outcomes. 58 | ROBOTS, REVENUES AND RESPONSES AND REVENUES 58 | ROBOTS, 7 project.html. ca/mof/en/2016/02/ontario-partners-with-airbnb-on-new-pilot- with Airbnbonnew pilotproject”. 168 Government ofOntario.19February, 2016.“Ontariopartners intelligenceto battletaxevasion”.wield artificial 167 Seealso,Browning, L.9October, 2015.“Computerscientists » Work closelywithdigitalplatformsand » Invest inadditionalenforcement stafffocused » Invest data in enhanced analytics capacity within arrival ofanythesepotentialfutures: Government ofOntarioshouldrespond term,soastopositiontheprovince intheshort wellforthe plausible futures thatwehave outlined,wesetoutbelow inherent around uncertainty somanyofthekey Taking elementsofitstrajectory? accountofthe What typesofoptionsshouldpolicymakers considerinlightofthechangingnature ofwork,andthe with Airbnb to support taxcompliance). with Airbnbtosupport understood (modelledon Ontario’s pilotproject providers/consumers are and clearlyarticulated regulatory obligationsforplatformsandservice cryptocurrency exchanges toensure taxand revenue tooffsetstaffingcosts. risk sectorsshouldyieldmore thansufficient estimates. Additionalinspectorsfocusedinhigh- is likely muchmore significantthanformal scope andsize oftheunderground economy on underground economyactivities,given the Open OntarioComplianceInitiative). (modelled onpilotworkdonethrough the2013 relevant ministries,aswellmunicipalities assessments shouldbebasedondatafrom all of high-riskactivitiesorred flags.These economy activitiesbasedonassessments with thegoalofidentifyingunderground ofFinanceandotherkeythe Ministry ministries, OPTIONS POLICY Newsroom . https://news.ontario. 167 168 » Create aworkinggroup ofkey ministriesat » Engagewiththefederal government ontax » Work directly withplatforms inareas such updated advice andanalysis. for theprovince inorder tomaintainrelevant, considers andproposes newpolicy/taxoptions to have adedicated,cross-ministry bodythat coming years, itwillbevitalfortheprovince and labourlandscape,whichmay occurinthe Given therapidchangesintechnological by asmall teamofdedicatedstaff. supported to longerterm.Thisworkinggroup shouldbe forOntariooverand opportunities themedium with amandatetoengageonrevenue threats Cabinet Office,Economic Development, Labour) the AssistantDeputyMinisterlevel (Finance, revenue collection. to federal enhanced legislationwouldsupport provision inCanada;andwhetheramendments collection issuesrelated todigitalservice Quebec’s recent agreement withUber). providers toremit taxowing(modelledon HST costsdirectly, ratherthanrelying onservice agreements thatwouldseeplatformscover as ride-sourcing toexplore for opportunities our toplinerecommendations forhowthe

59 | THE MOWAT CENTRE 60 | ROBOTS, REVENUES AND RESPONSES » Engagewithmunicipalitiesinadialoguearound » Advocate forprovincial representation atthe » Augmenttheworkinggroup witharangeof » Develop askills-and-trainingagendaforthe21st impact municipalities, it will be important for impact municipalities,itwillbeimportant property taxrevenue). Astheseissuesbeginto development charge revenue ornon-residential the changingnature ofwork(e.g.,reduced potential municipaltaxrevenue impactsof provincial taxrevenues. authorities have significantimplicationsfor to profit shiftingthatare dealtwithby national treaty discussions. Manyoftheissuesrelated federal level withrespect tointernationaltax adopted. rationale astowhytheitemcouldnotbe then eitherneedtoadoptordevelop apublic annual budget,whichthegovernment would actionable issuestoaddress intheprovince’s the government withanannuallistoffive These advisorsshouldbeasked toprovide modernization. delivery economics andservice intaxpolicy,external advisorswithexpertise across arangeofdisciplines. leading firmswithastrong pipelineoftalent as wellastable,innovative homeforworld- for highlyskilledworkers from around theworld, and elsewhere, topositionOntarioasamagnet from theprivate sector, universities/colleges thatengagesabroad century rangeofpartners government. expenditures are fairlyalignedbetweenlevels of mitigate thoserisksandensure revenues and municipalities orthefederal government to with topartner risks andpotentialopportunities the province tobeableassesslonger-term » Service » Service » Innovative withstakeholders partnerships » Alternative revenue streams fortheprovince discussion onthefuture ofwork. policydebateand emerge forfurther asimportant At amore detailedlevel, three key areas offocus » Advocate forfederal modernizationoftheEI so inthecomingyears. orare ofpublicservices, the delivery likely todo challenges toworkers, government revenues or addresses issuesthatare either already posing Each ofthepolicyoptionsproposed below resilience jurisdictions are competingfortalent. a more pressing painpointinaworld where compared topeerjurisdictionswillonlybecome investments inlabourmarket when supports and trainingenhancements.Canada’s under- program, intermsofbenefitduration,eligibility delivery modernizationandpolicy delivery through sophisticatedaccountingadvice. shopping andothermeansofPIT minimization on high-incomeearnerscouldleadtojurisdiction- economic mobility. Attempting toraisePIT rates PIT andpayroll taxes isthefactofincreasing abilities toincrease revenue generationfrom One ofthemainconstraintsongovernments’ trough of16.3percentin1992. GDP stoodat23.2percentin2017,upfrom a Canada, corporatecompensationasashare of per year between1980andthelate2000s. for G20nationsaveraged 0.3percentage points economies between1990and2009,thisdrop the 1980s.Itdeclinedin26of30advanced in Canadaandotheradvanced economiessince national incomehasbeentrending downwards year. Moreover, atamacro-level, share labour’s of increase inanappreciable manner, year over employed, contingentworkers whosewagesdon’t scenario thatcouldinvolve more precariously payroll taxrevenue generationinafuture ofwork there islittlescopeforinnovation around PIT and inthelabourmarket,work andopportunities fromApart focusingonthegenerationofdecent Alternative revenue streams wp-content/uploads/2016/01/aots5-milligan-smart.pdf. Institute forResearch onPublicPolicy (IRPP): 479-507.http://irpp.org/ D. Riddell,W. St-Hilaire, F. (eds) Incomes: TheEffects onProgressivity andTax Revenue” inGreen, M.2016.“Provincial171 Milligan,K.andSmart, Taxation ofHigh a Net 170 Johal,S.andThirgood, J.22November, 2016. policy/The-Labour-Share-in-G20-Economies.pdf. ary. https://www.oecd.org/g20/topics/employment-and-social- the G20Employment Working Group, Antalya, Turkey, 26-27Febru Labour Share in G20Economies 169 InternationalLabourOrganization (ILO) andOECD. 2015. have ledtoanincrease inthetaxes paidby high- Ontario, QuebecandNewBrunswickappearto practice, recent modestincreases inPIT ratesby . Income Inequality:TheCanadianStory. . Report prepared. Report forthemeetingof 170 Working Without 171 169 In In The - digital platformsare allpotentialmeasures to and awareness with campaigns,andpartnerships key area offocus.Enforcement education efforts, be subjecttosalestaxes butisnotremitted isa revenue from digitaltransactionsthatoughtto activity orinadvertent non-compliance.Tax whether asaresult ofunderground economy tax revenue thatisowedtothembutnotpaid, on ensuringthecollectionofallPIT andpayroll An alternative toraisingtaxratesisfocus jurisdictions. can beincreased before high-earnerswillshift earners. reports/preferential-treatment. Policy Alternatives. https://www.policyalternatives.ca/publications/ Exemptions, Credits, andLoopholesinCanada 174 MacDonald.D. 25May, 2017. tax-exemptions-for-investment-income/. Income: BoonorBane? 173 Spiro, P. 8February, 2017. a26?lang=eng&id=2040001 (Accessed on24April,2018). noted)”. otherwise politan areas nationalthresholds (CMA), annual(percent unless of taxfilersinCanada,provinces, territories andcensusmetro 172 StatisticsCanada.“Table 204-0001:Highincometrends removed universality from theOldAgeSecurity as poorseniorsatthesamecost.Ottawahas citizens are currently provided tothe richaswell example, manyprograms offered tosenior fiscal problems from theexpenditure side.For some government programs couldhelpaddress earners. income inCanada,largely benefitinghigh-income example, istaxed atlowerratesthanregular increased revenue. thesecouldleadto countries, andcurtailing landscape thanisthecaseinmostother significant feature ofCanada’s incometax by raisingrates.Tax credits are amuchmore PIT revenues through basebroadening than There ispotentiallygreater scopeforincreasing explore. 172 174 There may bealimitonhowmuchPIT Likewise, reducing theuniversality of CANSIM TheMowatCentre. https://mowatcentre.ca/ 173 . http://www5.statcan.gc.ca/cansim/ Investment income,for Tax Exemptions forInvestment The History andCostofTaxThe History . CanadianCentre for -

61 | THE MOWAT CENTRE 62 | ROBOTS, REVENUES AND RESPONSES » These include: and businessesare increasingly globalized. continue todrop as thenature ofworkchanges that taxrevenues asapercentage ofGDPdonot governments couldreform corporatetaxes so options forhowthefederal andprovincial Additionally, there are anumberofmore specific is anexampleofhowthismightbedone. income taxationforsmallbusinesscorporations the federal government withrespect topassive term. Thecompromise recently implementedby considerable fiscalbreathing spaceinthelong programs sothatthey stopgrowing couldcreate However, even cappingtheseexpenditure them politicallychallengingtoimplement. changes ofthistypeare suggested.Thismakes opposition from theaffected groups when There isusuallyagreat dealofvociferous testing. determine whichmightbesuitableformeans- could alsoconsiderreviewing itsprograms to incomes above $76,000.TheOntariogovernment clawingitbackforthosewith pension, andstarts mentary_452.pdf org/sites/default/files/attachments/research_papers/mixed/Com izing BusinessTaxation form.pdf andBoadway, R.andTremblay, J.31May, 2016. centre.ca/wp-content/uploads/publications/88_corporate_tax_re Issues andProspects forCanada 175 Boadway, R. andTremblay, J.April2014. Eliminating thedividendtaxcreditand predominantly high-earners. from itscurrent beneficiaries,whoare would alsolikely meetsignificantopposition CT baseandrevenue. Ofcourse,suchareform straightforward impactwouldberaisingthe and theefficiencyoftaxation,itsmost proposal may improve incomedistribution are currently taxed at50percent.Whilethis preferential treatmentofcapitalgains, . C.D. HoweInstitute. https://www.cdhowe. . TheMowatCentre. https://mowat 175 Corporate Tax Reform: which Modern - - - - » » ness Taxation. and Boadway, R.andTremblay, J.31May, 2016. 178 Boadway, R. andTremblay, J.April2014. ness Taxation. and Boadway, R.andTremblay, J.31May, 2016. 177 Boadway, R. andTremblay, J.April2014. ness Taxation. and Boadway, R.andTremblay, J.31May, 2016. 176 Boadway, R.andTremblay, J.April2014. » » Vigorously pursueinternationalandinter- reporting, Introduce country-by-country Require eachfirmthatundergoesanInitial Preferential taxtreatmentforrentfrom consistent withtheaforementioned OECD-G20 shifting tootherjurisdictions,whichis provincial taxcooperation across theboard. would undulyincrease costsoftaxcompliance CT inOntario.Businessesmay objectthatthis proposal willreduce thelikelihood ofnotpaying even onceontheincomethey generate.This these corporationsmay avoid beingtaxed corporations engageincross-border activity have financialflows.Sincemanymodern-day disclose profits where inevery country they where firmsbasedinOntariowouldhave to elimination oftheCT andcollectingrevenue approach typicallyargue foracomplete of itsnon-voting shares. number Ontario government withacertain Public Offering(IPO)inOntariotoprovidethe the future. tax revenues through boththeCT andthePIT in induced economicactivitywouldthenaddto innovation andeconomicactivityhere. This property –intheprovince, andinduce locate theirmostmobileresource –intellectual CT revenues, itwouldencouragefirmsto run thisproposal hasthepotentialof reducing commercialized inOntario. innovations whichareretainedand BEPS initiative. 178 177 176 Proponents ofthis toreduce profit Whileintheshort- Corporate Tax Reform Corporate Tax Reform Corporate Tax Reform. Modernizing Busi Modernizing Busi Modernizing Busi - - - . .

These include: the prospect ofautomationanddigitization. specifically designedforeconomiesfacedwith There are alsorevenue generationoptions » assets/files/ExecSummaryHeckly.pdf. for Reform Downturn?” inTaly, M.andMestrallet,G.(eds) excerpt from Heckly, C.2004.“Wealth Tax inEurope: Whythe 182 For areview oftheEuropean experience,seethefollowing BelknapPress.bridge, MA. 181 SeePiketty, T. 2014. com/files/2013/06/Taxation_Digital_Economy.pdf Economy. TheFrench Republic.https://www.hldataprotection. Small andMedium-Sized Enterprises,Innovation andtheDigital the MinisterDelegateforBudgetand for theEconomy andFinance,theMinisterfor IndustrialRecovery, Task Force onTaxation oftheDigitalEconomy 180 SeethediscussioninCollin,P. andColin,N.January, 2013. corporate-taxes.html?mcubz=1. nytimes.com/2016/01/13/opinion/a-progressive-way-to-replace- Way to EndCorporateTaxes.” 179 For asummary, seeBaker, D. 12January, 2016.“AProgressive » Taxing robots Introduce aglobalwealthtax certain assetsfromcertain thetax. of investments becauseoftheexemption of increased enforcement costs anddistortion experienced significantunder-reporting –which likely. Otherjurisdictionswithwealthtaxes have shifting tootherjurisdictionswouldbevery were atrulyglobalapproach. wealth- Otherwise would likely onlyyield significantresults ifit value oftheirtotalnetassets. see individualspay a progressive taxonthe province. disincentive tofirmsconductingIPOsinthe this approach wouldlikely actasasignificant absent similaractioninpeerjurisdictions, fromapart divestiture ofshares. Additionally, secure intheneweconomymightbeminimal, ongoing revenue Ontariowouldbeableto do nottendtopay dividends, of thisapproach isthatdigitaleconomyfirms the government asashareholder. purely through thedividendsfirmspay to suggested by BillGates,whoenvisions a . Institutdel’entreprise. 39-50.http://www.hluthafar.is/ . Thiswasmostfamously Capital intheTwenty-First century The NewYork Times. 182 180 , whichwould 181 . Report to theMinister . Report thustheactual Thisapproach Estate Taxation: Ideas 179 https://www. Adrawback . Cam - the DigitalEconomy 186 Collin,P. 2013. andColin,N.January Edge “The RobotTax Fallacy: Anthropomorphizing Automation.” 185 Thesearguments are basedonRosenblatt,G.5June,2017. communication technology(ICT) sector. subsidies foradvanced manufacturingandtheinformation the fieldwouldlikely finditchallengingto reduce incentives and in electronics manufacturing.Jurisdictionsthatare notleadersin on innovation inSouthKorea, already thecountry isaworldleader subsidies forR&D. Whilethisproposal mighthave aslowingimpact tax/) whatthelegislators actuallyproposed wasonlyareduction to technology/2017/08/09/south-korea-introduces-worlds-first-robot- world’s first‘robot tax’.” example: McGoogan,C.9August, 2017.“SouthKorea introduces Korea to isthefirstcountry introduce a“RobotTax,” (See,for 184 Whilemediastories have thatSouth extensively reported the-robot-that-takes-your-job-should-pay-taxes/. proposal in thefollowingvideo:https://qz.com/911968/bill-gates- the 183 BillGatesisthefounderofMicrosoft. Hearticulates » Taxing datacollectionandusage. difficult toimplement. constitutes arobot wouldmake suchatax definitional issuesaround whatactually were conductedelsewhere. prosperity asinnovative economicactivities of future CT revenue anddampen general jurisdictions. Thiswouldcompromise sources those firmscouldopttolocateinnon-robot tax manufacturers orfirmswhichdeploy robots, to thisidea.IfOntariowere totaxrobot pay PIT. employment optionsalongwiththeirabilityto workers, suchthatworkers ultimately losetheir tasks thatare currently by human performed world inwhichrobots more perform andmore (R&D) activity. in investment andresearch anddevelopment cross-jurisdictional mobilityanddistortions This typeofapproach eliminatesconcernsof technologies andbusinesslocationstrategies. is neutralwithrespect tobusinessmodels, only taxableaspectofthedigitaleconomythat users. Datacollectionandusageisalsothe typically obtainthisdataatnocostfrom their digital firmsusetogenerateincomeandthey represents oneofthekey resources that . http://www.the-vital-edge.com/robot-tax/ 183 There are several practicalchallenges . 186 The Telegraph Inpractice,adatataxwould 185 . https://www.telegraph.co.uk/ 184 Task Force onTaxation of Additionally, Data The Vital

63 | THE MOWAT CENTRE 64 | ROBOTS, REVENUES AND RESPONSES » » nies-for-using-our-personal-data.html. www.nytimes.com/2017/11/14/business/dealbook/taxing-compa nies forUsingOurPersonal Data”. 188 Madsbjerg, S.November 14,2017.“It’sTimeto Tax Compa the DigitalEconomy. 187 Collin,P. 2013. andColin,N.January Imposing ataxonpersonaldataprovided by Redefining permanentestablishment of theworld’slargest technologyfirms. from theUnitedStates, whichishometomany It wouldalsolikely facesignificantopposition on different jurisdictions’role invalue creation. complex formulatoassigntaxrevenue based international cooperation,andwouldrequire a for thedigitalerawouldrequire significant the permanentestablishmentconventions Ontarians are exempt from CT. Amending digital firmsthatcollectandusedatafrom (e.g., premises andpersonnel), whichmeans only takes accountofaphysicalpresence a permanentestablishment.Thisdefinition jurisdictions where or ithasitsheadquarters tax laws,acorporationcanonlybetaxed in data toafirm.Underexistinginternational account ofhowmanyresidents contribute usage by firms. of data,andvalue widelybasedon couldvary be difficulttoaccuratelyvalue different types be challengingtoimplementbecauseitwould years. of approach couldaccelerateinthecoming digital economy, themomentumforthistype increasingly recognized asakey assetinthe range ofotherjurisdictions.Yet, asdatais action by abroadabsence ofconcerted much more challengingtoworkwithinthe Firms locatedoutsideofOntariowouldbe immediate revenue sources fortheprovince. person) onOntario-basedfirmscouldcreate Ontarians mightbetaxed atalevel of$1per tax (e.g.,datacollectedon100,000ormore residents ofOntario 188 . Applyingadata-collection The NewYork Times Task Force onTaxation of totake . https:// 187 - - The trends anddrivers thathave transformed with stakeholders Innovative partnerships » Advocate foramendmentstothefederal » article36081209/. article36081209/. canada-must-stop-giving-foreign-companies-a-digital-advantage/ www.theglobeandmail.com/report-on-business/rob-commentary/ foreign companiesadigitaladvantage”. 190 Wyonch, R.August 24,2017. “Canadamuststop giving alInfo_18-19.pdf#page=137. finances.gouv.qc.ca/budget/2018-2019/en/documents/Addition nomic Plan:AdditionalInformation 2018-2019 189 Gouvernement duQuébec.March, 2018. well associaldialogueandlabourrepresentation. education, financialandwrap-aroundas supports, the areas ofskillsdevelopment andretraining, impactfulin collaboration couldbeparticularly to provide more effective approaches. Such and thenot-for-profit sectorshouldbeexplored educationinstitutions,labour post-secondary among government, private sectoremployers, models Novel andconsortium partnerships age ofwork. programs thatbetterreflect andservices thenew collaboratively withotherkey actorstodeliver growth, governments shouldalsolooktowork togeneratehigherlevelsopportunities of to increase revenue streams andexploring In additiontoimplementingcreative regimes that cannotbeaddressed by government alone. the way weworkposemanycomplexchallenges Explore salestaxlevies ondigitalservices though inpracticethey rarely do. system whichrelies onconsumerstodoso, firms toremit HST, ratherthanthecurrent Tax Act acrossservices arangeofsectors. generation inlightofthegrowth ofdigital plans. ThiswouldaidOntario`srevenue modelled onQuebec`srecently announced thatwouldplacetheonusondigital The . http://www.budget.

Globe andMail The QuébecEco 190 189 Excise . https:// , - - the costsfortheiremployees to pursuehigher coming years, thecompanyhasbeguntocover have andwhatisforecast toberequired inthe a gapbetweentheskillsthattheircurrent workers 100,000 employees by 2020. initiative, investing inskillsdevelopment for AT&T haspursuedanambitiousretraining by somecorporations. andreplicateefforts whatisalready beingdone employers, outmore tocarry robust retraining tosmall-andmedium-sized particularly support, in 1993. the past–athird lessin2015thanthey spent are investing lessinretraining thanthey have in Yet inpracticeweknowthatCanadianfirms employees whoseskillsmay becomeobsolete. interest intheirworkforce andabilitytoretrain theory, employers shouldalsohave avested technology impactstheirdailyoperations.In new worldofworkasthey seefirsthandhow understand theskillsprofile required forthe employees. Employers are bestpositionedto work more effectively withemployers toretrain Ontario, alongwiththefederal government, must SKILLSDEVELOPMENTRETRAINING, ANDSKILL-MATCHING best-companies/. People?” 192 Pressman, A.15March, 2017.“CanAT&T Retrain 100,000 aspx?AspxAutoDetectCookieSupport=1. vestments_in_Employee_Learning_and_Development_on_the_Rise. newsrelease/15-12-10/Turning_a_Corner_Canadian_Employers_In Development ontheRise a Corner:CanadianEmployers’ Investments inEmployee Learningand 191 TheConference Board ofCanada.10December, 2015. costly andhigh-risk. initiatives, however, largely becausethey are organizations have comeforward withsimilar skills required for thenewageofwork.Few other a valuable way to address thependingshiftin same company. TheAT&Texampledemonstrates skillstofindnewworkwithinthe the necessary education andprovide onlineresources toobtain Fortune. 191 Governments could provide direct http://fortune.com/att-hr-retrain-employees-jobs- . http://www.conferenceboard.ca/press/ 192 Having recognized Turning - Ontario’s SecondCareer strategy, forexample, work alsoexistinourcurrent policylandscape. Programs thataidingettingpeoplebackto from suchaprogram. underemployed, benefit whowouldnototherwise fortheunemployedbalanced withsupport and thattheseschemesarealthough itisimportant prove ausefulstrategyinthecomingyears – workforce intimesofeconomictransitionmay foremployers theirexisting support tosupport Kingdom’s Train toGainprogram. Financial such astheCanadaJobGrantandUnited skills gapshave existedforquitesometime– Demand-driven labourmarket policiestoaddress for training,thismodelalso provides economies For smallorganizations with limited capacity potential forotheremployers to‘poach’ talent. given increasingly highratesofturnover and This isaconsiderableconcernforemployers lowering risksassociatedwiththisinvestment. encourage investment intraining,whilealso needs enablethepoolingofresources to among employers withsimilarhumancapital and retraining collectively. models Consortium be inagoodpositiontotackleskillsdevelopment explored. Trade associations,forexample,may workforce isanotheroptionthatshouldbe the perceived riskofinvesting inone’s current modelsforretrainingconsortium toaddress Government forsector-basedor support new economy. programs, andhowthey canbere-tooled forthe has ornotworked ofthese inthedelivery however, andpolicymakers shouldevaluate what existing programs are notwithout criticism, manufacturing –toreskill fornewfields.These job loss–primarilyasaresult ofthedeclinein provides for those whoexperienced support

65 | THE MOWAT CENTRE 66 | ROBOTS, REVENUES AND RESPONSES in various formsfordecades. Thegovernment help jobseekers findwork–hasbeenrunning JobActive –Australia’s flagshipprogram to collaborate withotheractorstodoso. provide itmay suchservices, be more efficientto should beconsidered. Whilegovernments can such, intermediariestobetterconnectthetwo do nothave therelevant skillstofindajob.As need andgraduatescontinuetofeel thatthey cannot findcandidateswiththeskillsthey gaps. Ithaslongbeenthecasethatemployers also bevaluable inadressing growing skills thoughtful approaches toskills-matchingmay Trades Apprenticeship Consortium. in OntariomodelledaftertheHamiltonSkilled approachpiloting aconsortium-based totraining Employment Coalition(CSTEC), whoare currently (CME) andtheCanadianSkillsTraining and the CanadianManufacturers andExporters initiatives, suchasthecollaborationbetween some emerging examplesofthesetypes The OntarioChamberofCommerce hasprofiled address longer-termeconomicshifts. sector-specific traininginitiatives meantto convince actorstocollaborateinemployer- or of scale. 195 Seehttps://www.jobs.gov.au/jobactive. J.2014. 194 Holmes,A.andHjartarson, http://www.occ.ca/Publications/Moving_Forward_Together.pdf. Ontario An Employer Perspective ontheDesignofSkillsTraining Programs in J.2014. 193 Holmes,A.andHjartarson, their behalf. groups successfullymake these connectionson the program, private sectorandnot-for-profit is stilllargely incontrol ofthepolicydesign for and insteadputitouttotender. Whilegovernment recently stoppedproviding directly thisservice . Ontario Chamber of Commerce and Essential Skills Ontario. . OntarioChamberofCommerce andEssentialSkills Ontario. 193 However, itremains challengingto 195 Moving Forward Together. Moving Forward Together: 194 Other traditional approach toeducationhave left learning have emerged tofillthegapsthatour At thesametime,newinnovative methodsof discussed earliermore effective. also helptomake theskills-matchinginitiatives more granularapproach tocredentialing could micro-credentialing andstackablecredits. newapproachessupport toeducationsuchas institutions,anddomorepost-secondary to governments canworkmore strategicallywith training orre-skilling initiatives. Today, however, formal educationandotherformsofon-the-job learning willbegintoblurthelinebetween Over thelongerterm,apushtowards lifelong EDUCATION stackable credit systems. programs, formaleducationinstitutionsare increasingly using is asimilarlyflexibleandinnovative approach to traditionaldegree and non-traditionalcredentials from various institutions.Whilethis lifelong learningthatenablesindividualsto compilebothtraditional changing labourmarket. Stackablecredits are another formof in recent years dueto theirflexibilityandpotentialvalue inarapidly a classroom setting.Microcredentials have beengaining popularity four-year degree program), andcanbecompletedeitheronlineorin timeperiodthanformaleducationcourses(e.g.overshorter a a specificskillorcompetency. Theseare typicallyearnedina 196 Microcredentials thatdemonstrates are atypeofcertification equitable andaccessible. these newformsofeducationinaway thatis governments shouldconsiderhowtosupport implications foraccesstoeducation.To thisend, seek otherlendingoptions,whichhasimportant means thatstudentsmustpay outofpocket or Student AssistanceProgram (OSAP).This student grantsandloanssuchastheOntario are typicallynoteligibleforgovernment-provided the institutionsthatdeliver thisprogramming to educateforthenewworldofwork.However, been hailedashaving theflexibilitynecessary These more informalmodesofeducationhave the impactoftheseonskillstrainingisunclear. ‘massive openonlinecourses’(MOOCs),although technology‘bootcamps’and such asshort-term 196 This work withcollegesanduniversities torefine the humanitiesforexample.Governments should among studentspursuingtraditionaleducationin problem-solving. Theseskillsare oftendeveloped intelligence, communication,criticalthinkingand soft andtransferrable skillssuchasemotional the future ofworkhasproved of theimportance be overlooked. around Indeed,theuncertainty mean thattraditionaldegree programs should to educationare boundtobeuseful, this doesnot While thesenewnimbleandflexibleapproaches individualized Personal ActivityAccounts. recently introduced asimilarinitiative through a culture oflifelong learning. system ofeducationinthecountry, andpromote choices, develop anintegratedandhigh-quality tomakethe opportunity theirowninformed The conceptismeanttoprovide individuals topped upatregular andnever intervals expire. of programming forskillsdevelopment, whichare any stageoflife –thatcan beusedonavariety Singapore provides credits toevery citizen –at development. For example,SkillsFuture in dedicated toeducation,trainingandskills indirectly through individualized accounts Some jurisdictionshave addressed thisproblem force-france. ec.europa.eu/epale/en/content/personal-activity-account-comes- Activity Accountcomesinto force inFrance 198 European Commission.17February, 2017.ThePersonal 197 Seehttp://www.skillsfuture.sg/AboutSkillsFuture. type ofapproach isbecomingmore difficult entail forecasting offuture skills,althoughthis and thelabourmarket. should Thesepartnerships that enableskills-matchingbetweengraduates collaborate withemployers to develop strategies Governments andeducationinstitutionsshould skills. fields, tobetterfosterthedevelopment ofthese (Science, Technology, EngineeringandMath) curricula andprogramming, especiallyinSTEM 197 France has .

Newsroom. https:// 198 of thefuture islikely tobecharacterized by If current trends continue,thelabourmarket SUPPORT FINANCIAL AND WRAP-AROUND such fields. strategies toincentivize enrolment andtrainingin instances, andthusthere isroom forgovernment can bedifficult,precarious andlow-paidinsome and personalcare forthispopulation.Care work numbers, there willundoubtedlybejobsinhealth population agesandCanadiansretire inlarge in thecomingyears, suchascare work.Asour can reasonably expecttoseeincreased demand before. However, there are someareas where we as technologychangesmore rapidlythanever guide_final8-1.pdf. assets.aspeninstitute.org/content/uploads/2016/07/resource_ sources Guide. 200 Foster, N.Nelson,G.Reder, L.2016. ca/pilot-lessons/ Mowat Centre; Centre forSocialInnovation. D. Surman,T. and Urban,M.September2016. 199 For more informationonbasicincome,seeForget, E.Marando, safety net. education tofillothergrowing gapsinthesocial this accountmodelcouldbeextendedbeyond individualized accountsinSingapore andFrance, benefits from theiremployer(s). Similartothe work andwhotherefore donotreceive sufficient multiple jobsorgigsengaginginplatform emerged asapotentialsolutionforthoseworking benefitsschemeshavePortable alsorecently basic incomeprogram. jurisdictions istheimplementationofauniversal floor thatisunderdiscussioninavariety of context.Oneoptionforprovidinguncertain this –willbecrucialinthis – financialorotherwise a sufficientfloorforworkers andgreater support the standard employment relationship. Creating different employers deteriorationof andfurther multiple jobs,gigs,contractswithnumerous TheAspenInstituteFuture of Work Initiative. https:// 200 andUrban,M.Yip,C.May 2017. 199 Portable BenefitsRe Portable https://mowatcentre. Pilot lessons Basic Impact . The - .

67 | THE MOWAT CENTRE 68 | ROBOTS, REVENUES AND RESPONSES Governments canprovide direct funding, problems betterthangovernment actors. based organizations whounderstandlocal efficiently by localnot-for-profit orcommunity- are Oftenthesesupports providedservices. most housing, childcare andimmigrantsettlement face asoureconomyshifts,suchaffordable pressures that workers willlikely continueto programs thatcaneasethe andservices example, there are manywrap-around support workers asidefrom direct For financialsupport. There are otherways toprovide to support wages –andcouldbedrawnfrom atanytime. working onataskbasis,percentage ofgross of hoursworked by anindividual–orforthose Contributions wouldbepro-rated tothenumber the individualworkers ratherthantheemployers. and governments intoanaccountattached to pooling contributionsfrom employers, workers The costofthesebenefitscouldbecovered by can insteadbecarriedbetweenmultiplejobs. vision anddentalcoverage orpaidleave –that by asingleemployer –suchasprescription drug, provide asuiteofbenefitstraditionallyprovided accounts couldtake. Thegeneralobjective isto There are benefits multipleformsthatportable you-could-take-it-with-you/. you?” 201 Thirgood, J.27June,2017.“Whatifyou couldtake itwith ofprogramsefficient delivery andservices. community-based initiatives, resulting inmore resources orcapacity-buildingtosupport TLDR. TheMowatCentre. https://mowatcentre.ca/what-if- 201 – e.g.,higherwages,greater equalityanda labour representation have beenwell-documented membership continuestodecline.Thebenefitsof relatively strong inCanada,private sectorunion While publicsectorunionizationremains jurisdictions are examining. worth labour representation thatare emerging inother approaches tosocialdialogueandnewformsof Americacontinuestodeclinesteadily,North of thefuture. Whileunionmembershipin need more ofavoice inthelabourmarket It isbecomingincreasingly clearthatworkers REPRESENTATION SOCIAL DIALOGUE AND LABOUR 203 Seehttp://workersactioncentre.org/about/. why-unions. Labour Congres. 2015. tary/fast-facts-how-unions-protect-our-human-rights ;Canadian (CCPA). https://www.policyalternatives.ca/publications/commen Protect OurHumanRights 202 Black,E.Silver, J.10June,2011. the UnitedStates,ledby initiatives suchasOur alternative movement labour(or‘alt-labour’) in law. and workingtomodernize Ontario’s employment their work–by educating workers ontheirrights are unabletounionize becauseofthenature of those inprecarious employment –manyofwhom advocacy organization isworkingtomobilize (WAC) inOntario.Themembership-based emerged, suchastheWorkers’ ActionCentre Some newformsoflabourrepresentation have model isnolongersufficient. and capitalbecomeincreasingly mobile,this companies orfactories.However, asbothlabour it wasreasonable toorganize around specific employment waswithlocally-rooted corporations, labourmarket.today’s of theprevious islesswell-suitedto century is widelyacknowledgedthattheunionmodel sense ofsecurityandbelonging–althoughit 203 OutsideofOntario,there isalarger Why Unions? . CanadianCentre forPolicy Alternatives 202 Inanerawhenmost http://canadianlabour.ca/ Fast Facts: How Unions - automate tasks. workers are betterprepared whenfactories development, whichhelpsexplainwhyGerman decision-making aroundissues such as workforce unions have significantinfluenceingovernment formally unionize. alongside shareholders withouthaving to councils” andinfluencedecision-making concept enablesworkers toform“works Similarly, legislatedco-determination Germany’s competitiveness. – canincentivize cooperation toimprove industry collective bargaining –ratherthancompany-wide America.Forin North example,sector-wide that provides itwithmuchmore powerthan has longenjoyed alevel ofofficialpartnership offer somepromising models.InGermany, labour America,Europeanhold inNorth jurisdictions While noalternative unionmodelhasfullytaken group-insurance ratestoitsmembers. offers networkingevents, discussionforumsand freelancers andself-employed professionals and Union represents 375,000independent where unionshave failed. Walmart, whichare attemptingtofillthegaps 208 Vara, V. December, 2017.“CanUnionsStop the Far Right?” can-unions-stop-the-far-right/544152/?utm_source=twb. Atlantic. 207 Vara, V. December, 2017.“Can UnionsStop theFar Right?” chive/2017/07/the-conservative-case-for-unions/528708/. Unions.” 206 Rauch,J.July/August 2017.“TheConservative Casefor 205 Seehttps://www.freelancersunion.org/. money/2014/may/01/low-wage-new-union-walmart-fast-food. the sameoldsong?” 204 Hackman,R.1May, 2014.“Alt-labor:anew unionmovement or The GhentSystem,usedincountriessuchas or even administer government-funded benefits. withinsimilarsectors, employment opportunities for technologicalshifts,matchjobseekers with initiatives designedtoprepare theworkforce presence, unionscanplay akey role inretraining In jurisdictionsthathave astrong labour https://www.theatlantic.com/magazine/archive/2017/12/ The Atlantic. The Guardian https://www.theatlantic.com/magazine/ar 208 206 207 Furthermore, Germany’s . https://www.theguardian.com/ 204 TheUSFreelancers 205 - The growth inrecent years, inthefast- particularly unionize, asthistype of workhasseenasteady making iteasierforemployees offranchisesto made anumberofrecommendations aimedat example, Ontario’s ChangingWorkplaces Review todeliver programspartners For andservices. alternative labourrepresentation groups askey their abilitytoorganize, andlooktounionsor workers –eitherlegislatively –in orotherwise government shouldconsiderhowtosupport structures thatdonotexistinCanada, been aresult ofpathdependencyandestablished haslargelyWhile thesuccessoftheseefforts deliver unemployment insurancebenefits. Denmark andSweden,utilizes unionstoactually food andretail sectors.

69 | THE MOWAT CENTRE 70 | ROBOTS, REVENUES AND RESPONSES » Delivered digitally toincrease efficiencyand frameworkswillbe: delivery policies andservice practice? Successfulsocialandemployment What wouldthistypeofapproach looklike in access affordable housingandchildcare. byserved programs suchasEI,orstrugglingto address theneedsofcitizens today whoare ill- workers andyoung peopleinthefuture, butalso responsive willnotonlymeettheneedsof Redesigning systemstobemore adaptive and circumstance. citizensin systemsdesignedtosupport inany trends. Instead,afocusonresilience results technologiesorsocietalandeconomic particular correctly predicting theadoptionorevolution of resilience hasthebenefitofnotrelying on on unknowable,specifictrajectories.System changing circumstances —ratherthanfocusing their programs are resilient andadaptableto Governments shouldfocusonensuring modernizationand policyresilience delivery Service work.” 210 Johal,S.16January, 2018.“Gettingaheadofthefuture of focus-on-the-systems-not-the-skills/. tre. https://mowatcentre.ca/getting-ahead-of-the-future-of-work- work: Focus onthesystems,notskills.” 209 Johal,S.16January, 2018.“Gettingaheadofthefuture of andprograms» Integratedwithotherservices » Customized andflexiblydesignedto » Continuallyrefreshed toadjustemerging » Evaluated foreffectiveness andimpact » Clearlyfocusedonoutcomes offered by government partners anddelivery accommodate thevaried needsofcitizens social andeconomicconditions governments reduce transactioncostsforcitizens and 209 TLDR . TheMowatCen 210 - services faster,services atfarlesscostthantraditional Digital government canalsodeliver services cent. also reducing theprobation failure rateby 33per the state$536millionover a3-year period,while system focusedonprobation violationssaved outcomes-based approach inthecorrections California’s tointroduceimportant. efforts an fiscal constraintwillbecomeincreasingly growth macro-economic environment inwhich for citizens whilealsosaving costsinaslow will have thedualbenefitofbetteroutcomes These approaches, ifimplementedthoughtfully, uploads/publications/91_better_outcomes_for_public_services.pdf. uploads/publications/91_better_outcomes_for_public_services.pdf. funding. Achieving socialimpactthrough outcomes-based for PublicServices: 211 Gold,J.andMendelsohn,M. August 2014. highly skilledindividuals. factor inengenderingtrustfrom investors and government effectiveness willbeanimportant increasingly competitive globallandscape, that achieve theirintendedoutcomes.Inan staff forhigher-value tasksanddeliver services positioned tomaximize theirresources, free up frameworkseffectivelydelivery willbewell- Governments thatcandeploy modernservice 2012-2015. 3.5 billionpoundsinthe3-year periodspanning Government saved DigitalService thetreasury in-person ortelephonechannels–theUK’s 211 TheMowatCentre. https://mowatcentre.ca/wp-content/ Better Outcomes Increasing the size of the economic pie should be the first order priority, but revenue integrity (i.e., ensuring all taxes that are owed are paid), creative options to restructure taxation models so that all economic activity is taxed equitably, and the renewal of service delivery frameworks are equally important. 71 | THE MOWAT CENTRE 71 | THE MOWAT 72 | ROBOTS, REVENUES AND RESPONSES 7 was outsidethescopeofthisreport, itisapparent thattheriskstoprovincial income,payroll, sales they currently have andhowthatscopemay constrainedby 2040.Whilethistypeofanalysis befurther report shouldbeafirststepforgovernments interested inunderstandingthescopeforactionthat moreUndertaking detailed,quantitative modellingofpotentialimpactsthetrends outlinedinthis technological trends. pressures, organizations from those areas may beequallysqueezed by broader macro-economic and withtheprivateWhile partnerships andnot-for-profit sectormay beabletorelieve someofthesecost- andemployment retrainingsupports programs thatwillbeincreasingly intheyears ahead. important be hard-pressed toprovide like essentialservices healthcare andeducation,aswellthe social be atopofmindissueforpolicymakers goingforward. Absentsufficientrevenue, governments will How changingworkpatternsanddisruptive technologieswillimpactgovernment revenues should governments andstakeholders. of therapidlychangingpolicyenvironment andtheabilitytoworkcollaboratively withother only oneofanumberthornypolicyproblems thatwillrequire innovative approaches, anappreciation Clearly thechallengesfacinggovernments intheyears aheadare wide-ranging.Thefuture ofworkis decades. directions are possible, andpossiblenow, aboutwhatmay despiteuncertainty happeninthecoming administration, andsociallyinclusive, prosperous economieswillbeleaders.Concrete stepsinthese to prepare forafuture inwhichjurisdictionswithcreative, nimbleandeffective modelsofpublic prove tobeineffective, orworsestill,counter-productive. Yet, policymakers musttake theinitiative that couldplay couldleadtoparalysis,given out. Uncertainty theriskthatspecificpolicyactionsmight The pathforward ontheseissuesisdaunting,largely becauseofthewiderangeplausible futures frameworksare delivery of service equallyimportant. options torestructure taxationmodelsso that alleconomicactivityistaxed equitably, andtherenewal be thefirstorder priority, butrevenue integrity(i.e.,ensuringalltaxes thatare owedare paid),creative and corporatetaxare real, andwillrequire aclear plan.Increasing the size oftheeconomicpieshould CONCLUSION