As noted by European media, the first AI tax proposals could come as early as this year or early next year.
Discussions are driven by concerns that the active introduction of AI could significantly reduce the number of jobs, which, in turn, would lead to a decrease in revenues from payroll taxes. In modern economies, taxes on labor and citizens’ income (income tax) are the main sources of budget revenues. In the European Union, they account for about 53% of all tax revenues, which explains the need to find new ways to replenish the budget.
At the same time, IMF experts in their analysis of the impact of AI on the labor market, along with concerns that it may have a destructive effect on it, ask whether AI should be taxed. Today, an employee pays taxes, but if AI replaces him, there will be no one to pay taxes. Accordingly, a corporation can get additional profit from the introduction of AI, while states will get nothing from it. Moreover, a special AI tax may reduce the speed of investment and innovation, suppressing productivity growth.
To balance tax policy, the IMF suggests paying attention to the tax exemptions existing in developed countries for software and computer hardware. These have been increased in recent years, encouraging companies to replace workers through as much automation as possible. Since this leads to higher corporate profits, general corporate income taxes should be strengthened to protect the tax base from a further decline in labor’s share of income and to compensate for growing property inequality. According to IMF experts, this is important because increased investment in education and employee retooling will require increased government revenues.
Therefore, the initiative to introduce a global minimum tax for multinational companies from 2024, agreed by more than 140 countries, is a step in the right direction, the IMF believes. Recall, its rate is set at 15% for companies with income over 750 million euros per year, In addition, the Fund proposes to consider the possibility of introducing an additional tax on excess profits and increasing the tax on capital gains.
