Tax on AI tokens could fill UK fiscal slump
A UK think tank has proposed an international tax on AI output that would target the tokens it produces to bridge feared gaps in government revenue. The report author, Oxford professor Ben Ansell, argues that, for a variety of reasons – mainly domestic ageing but also the structure of the economy – reform of Britain’s tax system is increasingly unavoidable. The Institute for Public Policy…
A UK think tank has suggested an international tax on AI-generated tokens to address potential revenue gaps, according to a report by Oxford professor Ben Ansell. The report, published by the Institute for Public Policy Research (IPPR), notes that the UK's current tax system is increasingly skewed towards the elderly and wealthy due to aging demographics and economic structures.
To tackle this, the IPPR proposes an international token tax to capture a portion of the value generated by AI models, requiring consistent auditing of AI companies for international cooperation. In the short term, the report suggests equalizing capital gains tax with income tax marginal rates to offset the wealth gap between generations, and imposing a tax on speculative behaviors like gambling and crypto investing.
The IPPR's recommendations would necessitate AI companies to audit their token production processes and pay corresponding taxes. However, the report acknowledges that a standalone UK token tax could lead to competitiveness issues, as foreign firms may not face similar taxation. With population aging projected to account for almost 80% of the fiscal pressure on the UK by 2075, the report advocates for shifting taxes away from younger demographics and towards property and wealth, including a proposed 0.65% valuation tax on properties.
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