Governments should use fiscal policies to atone for technology-related carbon emissions, urges report:
The International Monetary Fund recommends that governments facing economic disruption induced by artificial intelligence explore fiscal policies such as taxes on excess earnings and a green fee to compensate for AI-related carbon emissions.
The IMF stated that generative AI, which refers to computer systems like ChatGPT that can generate convincing, human-like text, voices, and images from basic cues, can spread “much faster” than prior technological achievements like the steam engine.and technological advancements are occurring at “breakneck speed.
The international lender of last resort recommended that governments pursue a variety of policies to reduce the impact on jobs, including a carbon tax to pay for the environmental burden of running 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,” according to an IMF paper released Monday.
According to a recent analysis, AI now accounts for less than half of the electricity used in datacenters, but it has the potential to become their primary source of consumption, increasing the overall amount of electricity required. Data centres, servers, and data transmission networks currently account for up to 1.5% of world emissions.
The paper also cautioned that the percentage of wages to national income may fall further as a result of AI, worsening inequality, while dominant tech businesses may strengthen their market position and gain undue financial advantages.
The IMF report advised against taxing AI investment, although it did recommend increasing capital income taxes such as corporate tax and personal income taxes on interest, dividends, and capital gains. According to the IMF, the measures might include a tax on excess profits. It also stated that corporate income tax had recently come under “severe pressure” due to profit shifting and certain countries decreasing 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,” according to the IMF.
According to the IMF, the commercial and public sectors stand to benefit greatly from cost savings, new revenue streams, and more effective service delivery. However, it cautioned that AI might damage occupations across the skill spectrum, including both white-collar and blue-collar positions.
According to research, AI would mostly effect white-collar professions such as law, finance, and medicine, but the IMF also stated that blue-collar occupations in manufacturing or trade may be affected. According to the IMF, AI affects approximately 60% of occupations in industrialised economies such as the United States and the United Kingdom, with half of these jobs potentially being severely impacted.
The IMF warned that labor-saving automation could increase job losses in both low-skill and cognitive occupations. It went on to say that an AI-related improvement in productivity – a measure of economic efficiency, or the amount of production generated by a person for every hour worked – might create new employment, but such a transition could be “costly.
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 focussing education and training on providing workers with new skills and the ability to adapt to new technologies.
It also proposed employing AI and its analytical capabilities to revamp tax systems and implement new levies, such as a real-time market-value-based property tax.
The research also voiced concern about universal basic income, in which working-age persons are provided a state stipend regardless of their earnings or employment status, claiming that it would incur enormous expenditures. It stated that delivering “unconditional benefits to all” would include higher-income groups, potentially resulting in huge budgetary expenses.
Era Dabla-Norris, deputy director of the IMF’s fiscal affairs department and co-author of the paper, stated that if AI causes “much more significant disruption” in the future, governments may pursue UBI.
“Countries could start thinking about how such systems could be designed and implemented,” according to her.