Artificial intelligence will make income tax redundant within five years, according to the founder of digital bank Monzo.
Former chief executive Tom Blomfield warned that advances in AI could trigger a major jobs crisis, with automation increasingly replacing roles across a wide range of industries.
Speaking on an episode of The Rest is Money podcast, he said that as traditional employment declines, the current system of income tax – largely dependent on wages – would no longer be sustainable.
He suggested it could instead be replaced by a tax on the resources used to build and run AI.
He said: “I don’t think we’ll tax human labour, we’ll tax compute, [meaning systems like] data centres, and then we will use the proceeds to pay for government.”
According to Mr Blomfield, AI agents can now perform narrow human tasks “better than any human, more or less”.
He added: “These tools are performing beyond university professor level – they are actually beating humans in narrow domains. They’re not yet generalisable, so they’re very narrow geniuses, but by the end of 2026 they will be generalisable.”
He said that in the near future, professions such as tax accounting will require almost no humans at all.
According to jobs site Adzuna, adverts for entry-level jobs fell by 35pc, comparing data from last December to November 2022, when ChatGPT launched.
At the start of this year, Morgan Stanley predicted that Britain would suffer the impact of an AI-fuelled jobs crisis the most, partly because of its dependence on professional services. The services sector accounted for 81pc of economic output last year.
Amidst such a crisis, it is unclear how governments would raise revenue.
