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.
  

  
  

	

	
	

	
	



  
  
    Last week, OpenAI, the company behind ChatGPT, said that a “robot tax” on automated labour could be introduced, along with more taxes on the wealthy.OpenAI said governments could increasingly tax the selling of shares or property as well as corporate profits if unemployment erodes revenues from income levies.In a policy paper, it said: “Policymakers could rebalance the tax base by increasing reliance on capital-based revenues – such as higher taxes on capital gains at the top, corporate income or targeted measures on sustained AI-driven returns.”Income tax and National Insurance contributions are the two biggest sources of government revenue in the UK, making up a combined 42pc of the total.Taxes on profits from selling shares and property, as well as stamp duty and inheritance tax, make up just 4pc of government revenue in the UK.A tax on AI services could prove difficult to implement, given that efforts to tax tech giants on a much smaller scale have come under pressure.In recent years, Donald Trump has repeatedly attacked taxes on the revenues of US big tech giants, prompting a review of the UK’s digital services tax.The tax would impose a 2pc charge on tech companies’ revenues in the UK, in practice largely targeting American firms.