IMF Sounds Alarm Over AI’s Threat to Government Tax Bases
The head of the International Monetary Fund has warned financial ministers that widespread AI adoption could erode tax bases across the world as incomes are squeezed by the technology. Kristalina Georgieva, the managing director of the IMF, said governments may be ill-prepared for a potential slump in tax revenue brought on by AI’s impact on the labour market. At the fund’s summit in Bangkok,…
The head of the International Monetary Fund (IMF), Kristalina Georgieva, has cautioned that the widespread adoption of artificial intelligence (AI) could undermine government tax bases worldwide due to the technology's impact on income and the labor market. At the IMF's summit in Bangkok, Georgieva warned that AI could affect up to 60% of jobs in wealthy nations and called it a "slow-moving tsunami."
Georgieva suggested that governments should make difficult choices and implement significant tax reforms to shift revenue streams from labor to other areas such as land or investment. She emphasized the need for fiscal space to invest in infrastructure and skills, as well as tax systems tailored to the AI era. The UK faces particular challenges, as income taxes account for over a quarter of total tax receipts, and National Insurance paid by workers and employers makes up around 16% of total receipts in 2025-26.
The IMF also echoed warnings from Financial Stability Board chair Andrew Bailey and Bank of England deputy governor Sarah Breeden about potential stock price corrections in the AI ecosystem, which could have global repercussions.
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