The new applications of artificial intelligence (artificial intelligence, AI) are increasingly being used by businesses in a range of industries as their benefits to productivity and profitability are evident.

Many are talking about a new revolution in the economy, similar to that of the internet at the end of the 20th century and other great inventions in earlier periods.

On the other hand, however, there are strong concerns that creative AI will lead, at least in a transitional phase, to an increase in unemployment on a larger scale than during the introduction of automation into the production process in the past. And this is because new AI applications can replace not only unskilled workers but also workers who have skills.

A significant reduction in employment, if indeed there is one, will have the consequence of reducing tax revenues from work and therefore putting pressure on the public finances of the countries, at a time when they will have to increase their spending on unemployment benefits and to train the unemployed in new skills, spreading a social safety net.

In addition, the needs for increased social protection spending will coincide with other needs for increased spending for the green and digital transition and due to population aging in many developed countries.

To counter the risk of such a development and to make the economic benefit of artificial intelligence more widespread in the population, the International Monetary Fund argues in his report that the redistributive function of fiscal policy must be strengthened.

In this direction, the IMF notes that taxation on capital income has been decreasing in developed economies steadily since the 1980s, having fallen to close to 20%, while on the contrary labor taxation is increasing and moving above 30% on average. This trend, according to the IMF, must be reversed by increasing corporate taxation to avoid the erosion of the tax base.

The Fund notes that the global minimum tax of 15% on multinationals, to which more than 140 countries have agreed, is a step in the right direction, which should of course be implemented. From there, he talks about other measures, such as the imposition of an additional tax on surplus profits, a tax that has been at the center of debate and decisions in the last two years and in the European Union due to the surplus profits of energy companies. This tax was also applied in Greece, for the extraordinary profits that the refineries had in 2022 and will be applied for their profits in 2023, according to the decision announced on Thursday by the government to impose an additional tax of 33% that will generate revenue 300 million euros, which will be allocated mainly to support low-income pensioners.

In the age of artificial intelligence, excess profits taxation should, in the spirit of the IMF’s analysis, be much more general, as it will cover more sectors of the economy. The Fund also proposes increasing taxation on capital gains.

Such a restructuring of tax policy would secure the resources needed for higher spending on unemployment benefits and reduce increased inequalities in the distribution of wealth. The IMF considers that in most countries there is room for a wider range of coverage of the unemployed and more generous support for them.