IMF suggests tax on AI's CO2 emissions, but not AI itself
- Reference: 1718692149
- News link: https://www.theregister.co.uk/2024/06/18/imf_ai_fiscal_policy_suggestions/
- Source link:
That proposal emerged on Monday in a [1]discussion note titled "Broadening the Gains from Generative AI: The Role of Fiscal Policies."
The thrust of the paper is that generative AI has enormous potential to improve productivity, but it could also bring less pleasant change. Automation may bring radical changes to the world of work and/or hurt national balance sheets, as fewer workers are required and tax takes drop.
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The document also notes that past waves of automation have generally displaced low- and middle-skill jobs involving routine tasks, but generative AI's capabilities are more sophisticated than past automation technologies – "potentially amplifying job losses in cognitive occupations. Consequently, the labor income share in national income may further decline, exacerbating income and wealth inequality."
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As the name of the document implies, the IMF's boffins think fiscal policy should form part of nations' response – along with social protection systems like social insurance, labor market programs, and social assistance schemes, labor market policies, and education and training policies.
On the tax front, the authors suggest rethinking policies on how capital is taxed. It generally attracts lower taxes than labor, but if capital uses AI to reduce demand for labor, the tax burden needs to shift.
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The IMF's analysts are also concerned about "rising market power and economic rents enjoyed by dominant firms in winner-take-all markets." While the document doesn't mention hyperscale operators, such outfits have already shown a capacity to spend billions on AI infrastructure – sums few can match.
[6]IMF boss warns of AI 'tsunami' coming for world's jobs
[7]Will AI take our jobs? That's what everyone is talking about at Davos right now
[8]Search history can calculate better credit ratings than pay slips, says International Monetary Fund
[9]Infosys co-founder doubles down on call for 70-hour work weeks
Energy is another issue the document touches on, suggesting that "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."
The Fund's analysts do not, however, call for a direct tax on AI. Such a levy, they suggest, would impede uptake and see nations that adopt this approach fall behind rivals.
The authors also dip into some AI utopianism, suggesting generative AI "has significant potential to further advance tax administration practices to improve tax enforcement."
"The AI-associated information revolution can ultimately enable tax system redesign," the paper enthuses, adding "Gen AI will turn classic tax theory upside down and urge a rethink of the old ways of doing things. It may, for instance, usher in the design of a personalized progressive value-added tax, an income tax based on lifetime income, or a real-time market-value-based property tax."
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Or it might not. The document also contains an admission its authors don't know what changes AI will cause: "Policies to steer and cushion the implications of AI will depend on how future scenarios unfold." ®
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[1] https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2024/06/11/Broadening-the-Gains-from-Generative-AI-The-Role-of-Fiscal-Policies-549639
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZnFaxLydTSESWco5oZRJ2QAAAMg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZnFaxLydTSESWco5oZRJ2QAAAMg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZnFaxLydTSESWco5oZRJ2QAAAMg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZnFaxLydTSESWco5oZRJ2QAAAMg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2024/05/15/imf_boss_ai_tsunami/
[7] https://www.theregister.com/2024/01/18/ai_davos_jobs/
[8] https://www.theregister.com/2020/12/18/web_search_history_credit_ratings/
[9] https://www.theregister.com/2024/01/15/narayana_murthy_long_work_comments/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZnFaxLydTSESWco5oZRJ2QAAAMg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://whitepapers.theregister.com/
Re: This looks rather like a PTerry idea in reverse
Vetinari's solution: tax the rat farms.
Be afraid, be very afraid. I think there's some merit to charging maybe a premium for large energy users to cover infrastructure upgrades. But that sort of happens give those costs are meant to be included in our energy bills anyway. CO2 emissions is just greenwashing it. The more alarming part is-
Gen AI will turn classic tax theory upside down and urge a rethink of the old ways of doing things. It may, for instance, usher in the design of a personalized progressive value-added tax, an income tax based on lifetime income, or a real-time market-value-based property tax."
VAT is a pretty regressive tax. Personalising it could imply tracking spending to vary any rate. Obviously that has privacy concerns, not to mention making shopping confusing. UK generally doesn't allow ex-VAT prices to be displayed so people might have to get used to US-style pricing where VAT/sales tax gets added at the checkout. But it could be used to make VAT less regressive by creating VAT bands based on income. Then again, there has been a lot of noise about creating individual carbon allowances that could replace, or more likely supplement VAT.
Tax based on lifetime income seems a bit pointless given income is already taxed, along with additional taxes like capital gains. It sounds like a variation on US proposals to tax assets as a 'wealth tax' and tax unrealised income. Real-time property tax also seems a bit pointless and risky given propert taxes are usually annual charges.
But other than using AI to generate new tax models, it doesn't sound like it really needs AI. Plus it'd need HMRC to spend billions to implement and manage any dynamic taxing models. Like a lot of AI hype, it seems to be a soluton looking for a problem, although I guess an AI might be able to help monitor for tax evasion and fraud.
This looks rather like a PTerry idea in reverse
The city offers cash for rat tails to encourage the killing of rats. The cost of providing this bonus rapidly increases. Vetinari's solution: tax the rat farms.
(Actually, I rather like the idea of calling AI systems 'rat farms' :)