HomeTech Balance the effects of AI with income tax and green tax, says IMF

Balance the effects of AI with income tax and green tax, says IMF

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Balance the effects of AI with income tax and green tax, says IMF

Governments facing economic upheaval caused by artificial intelligence should consider tax policies that include taxes on excess profits and a green tax to offset AI-related carbon emissions, according to the International Monetary Fund.

The IMF said that unlike previous technological advances like the steam engine, generative AI (the term for computer systems like ChatGPT that can produce compelling, human-like text, voices and images from simple handwritten messages ) can spread “much faster.” and advances in technology are occurring 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 take into account the environmental impact of running computer servers that train and operate intelligence systems. artificial.

“Given the large amount of energy consumed by AI servers, taxing the associated carbon emissions is a good way to reflect external environmental costs in the price of the technology,” the IMF said in a report published Monday.

AI currently accounts for less than half of electricity use in data centers, but it could become their largest source of consumption and increase the total amount of electricity required by such facilities. according to a recent report. Data centers, servers and data transmission networks currently account for up to 1.5% of global emissions.

The report also warns that the share of wages as a proportion of national income may decline further as a result of AI, causing inequality to widen, while dominant technology companies could strengthen their market power and reap excessive financial rewards.

The IMF report advised against taxing investment in AI, but suggested increasing capital income taxes, such as corporate tax and personal income tax on interest, dividends and capital gains. The changes could include a tax on excess profits, the IMF said. He added that corporate income tax had recently come under “severe pressure” due to profit shifting as some countries reduced their rates.

“More effective taxation of capital income requires the restoration of the corporate income tax and calls for well-designed excess profits taxes, higher taxes on personal capital income through better implementation of automatic information exchange between countries and increased taxation of capital gains,” the IMF said.

The IMF said there were many potential benefits for the public and private sectors, including cost savings, new sources of revenue and more efficient service delivery. However, it warned that AI could affect 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 jobs related to manufacturing or commerce in the white-collar sector could also be affected. The IMF estimates that around 60% of jobs in advanced economies such as the United States and the United Kingdom are exposed to AI and half of these jobs may be negatively affected.

“Labor-saving automation could amplify job losses in both cognitive and low-skilled occupations,” the IMF said. He 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 that transition could be “expensive.”

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The report, Expanding the Benefits of Generative AI, made other recommendations, including: expanding unemployment insurance to self-employed workers; direct social benefits to people “permanently displaced” by AI-related employment disruption; and direct education and training towards providing workers with new skills and the ability to adapt to new technologies.

He also recommended using AI and its analytical capabilities to reform tax systems and introduce new levies, such as a property tax based on real-time market value.

The report also expressed caution about universal basic income, under which working-age adults receive a state stipend regardless of their income or employment status, saying it would generate significant costs. He said providing “unconditional benefits to all” would cover higher income groups, “potentially generating significant fiscal costs.”

Era Dabla-Norris, deputy director of the IMF’s fiscal affairs department and co-author of the report, said that if AI led to “much more significant disruption” in the future, then governments could consider UBI.

“Countries could start thinking about how to design and implement such systems,” he added.

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