Governments faced with economic upheaval caused by artificial intelligence should consider fiscal policies including taxes on excess profits and a green levy to atone for AI-related carbon emissions, according to the International Monetary Fund.
The IMF said unlike previous technological breakthroughs such as the steam engine, generative AI – the term for computer systems such as ChatGPT that can produce convincing, human-like text, voices and images from simple prompts – can spread “much faster” and advances in the technology are happening at “breakneck speed”.
The international lender of last resort said governments should consider a range of policies to mitigate the impact on jobs, including a carbon tax to account for the environmental impact of operating the computer servers that train and operate AI systems.
“Given the large amount of energy consumed by AI servers, taxing the associated carbon emissions is a good way to reflect the external environmental costs in the price of the technology,” said the IMF in a report published on Monday.
AI currently accounts for less than half of electricity use in datacentres but it could become their main source of consumption and push up the overall amount of electricity such facilities require, according to a recent report. Datacentres, servers and data transmission networks account for up to 1.5% of global emissions at present.
The report also warned that the share of wages as a proportion of national income may decline further as a result of AI, causing a widening of inequality, while dominant tech companies could reinforce their market power and reap excessive financial rewards.
The IMF report counselled against taxing investment in AI but suggested raising capital income taxes such as corporation tax and personal income taxes on interest, dividends and capital gains. The changes could include an excess profits tax, said the IMF. It added that corporate income tax had recently come under “severe pressure” from profit shifting and some countries lowering their rates.
“More effective taxation of capital income requires restoration of the corporate incomes tax and calls for well-designed excess profit taxes, higher personal income taxes on capital through better enforcement of automatic information exchange between countries, and enhanced taxation of capital gains,” said the IMF.
The IMF said there were many potential benefits for the private and public sectors including cost savings, new sources of revenue and more efficient delivery of services. However, it warned that AI could hit jobs across the skills spectrum, affecting both white-collar and blue-collar jobs.
Research suggests that AI will primarily affect white-collar professions such as law, finance and medicine, but the IMF added that manufacturing or trade-related jobs in the blue-collar sector could also be hit. The IMF estimates about 60% of jobs in advanced economies such as the US and UK are exposed to AI and half of these jobs may be negatively affected.
“Labour-saving automation could amplify job losses in both low-skill and cognitive occupations,” said the IMF. It added that an AI-related increase in productivity – a measure of economic efficiency, or the amount of output generated by a worker for each hour worked – could create new jobs but such a transition could be “costly”.
after newsletter promotion
The report, Broadening the Gains from Generative AI, made a number of other recommendations, including: extending unemployment insurance to self-employed workers; targeting social benefits at people “permanently displaced” by AI-related job disruption; and gearing education and training towards giving workers new skills and ability to adapt to new technologies.
It also recommended using AI, and its analytical abilities, to overhaul the tax systems and introduce new levies, such as a real-time market-value-based property tax.
The report also expressed caution about universal basic income, under which working-age adults are given a state stipend regardless of their earnings or employment status, saying it would generate significant costs. It said providing “unconditional benefits to all” would cover higher-income groups, “potentially generating significant fiscal costs”.
Era Dabla-Norris, the deputy director of the IMF’s fiscal affairs department and a co-author of the report, said if AI led to “much more significant disruption” in the future, then governments might consider UBI.
“Countries could start thinking about how such systems could be designed and implemented,” she added.