Generative artificial intelligence technologies hold great potential for enhancing delivery of public services and improving productivity. However, the current scale and speed at which these technologies are being adopted is also increasing concerns about inequality and job loss.
Despite this, the IMF recently published a paper claiming that fiscal policy had a significant role to play in supporting opportunities and gains under generative artificial intelligence. For this to be effective, however, tax and social protection systems globally would need to be upgraded.
Models from the IMF, supported by lessons from previous automation waves, suggest that generous employment insurance could shield workers from the negative impact of artificial intelligence, allowing those who lose their jobs to find others that match their skills better.
The report also highlights how apprenticeships, sector-based training, reskilling and upskilling programs could play a bigger role in preparing workers for employment in the age of artificial intelligence.
With industry closures and the adoption of automation growing, comprehensive programs for social assistance could be required by workers facing decreased demand for labor and long-term unemployment.
The IMF also highlights the need to employ innovative approaches that make use of digital technologies to ease the process of expanding coverage of social-assistance programs. It does, however, note that how artificial intelligence impacts developing economies and emerging markets may differ, as may how policy makers in these nations choose to respond.
In the report, the agency cautions against imposing any tax on artificial intelligence, arguing that while generative artificial intelligence could lead to concentration of wealth and higher income inequality, imposing taxes could decrease the speed of innovation and investment and, in turn, stifle any productivity gains.
Many corporate tax systems also discourage automation, which makes them less than ideal for the age of artificial intelligence.
To neutralize increasing inequality as a result of artificial-intelligence adoption, the IMF proposes that taxes on capital income be strengthened. This, the agency believes, will protect the tax base against a further decline in income generated by labor while also offsetting growing wealth inequality. This is important, particularly since more investment in social spending and education to expand the gains from artificial intelligence will need more public revenue.
The agency also called for the strengthening of corporate income taxes, noting that a minimum tax rate to be adopted by more than 140 nations globally would need to be agreed upon. Other measures discussed included an additional tax on excess profits and higher taxes on capital gains.
With companies such as NVIDIA Corp. (NASDAQ: NVDA) providing the chips helping to drive AI innovation, it is now up to different AI companies to develop solutions that leave no one behind as the AI revolution unfolds.
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