IMF suggests tax on AI's CO2 emissions, but not AI itself

The International Monetary Fund has suggested one way to ameliorate the impact of AI: A tax on the carbon dioxide emissions created in generating masses of energy to power the computers that many hope will do some thinking for us. That proposal emerged on Monday in a discussion note titled: "Broadening the Gains from …

[Neil Barnes]

This looks rather like a PTerry idea in reverse

The city offers cash for rat tails to encourage the killing of rats. The cost of providing this bonus rapidly increases. Vetinari's solution: tax the rat farms.

(Actually, I rather like the idea of calling AI systems 'rat farms' :)

[Jellied Eel]

Re: This looks rather like a PTerry idea in reverse

Vetinari's solution: tax the rat farms.

Be afraid, be very afraid. I think there's some merit to charging maybe a premium for large energy users to cover infrastructure upgrades. But that sort of happens give those costs are meant to be included in our energy bills anyway. CO2 emissions is just greenwashing it. The more alarming part is-

Gen AI will turn classic tax theory upside down and urge a rethink of the old ways of doing things. It may, for instance, usher in the design of a personalized progressive value-added tax, an income tax based on lifetime income, or a real-time market-value-based property tax."

VAT is a pretty regressive tax. Personalising it could imply tracking spending to vary any rate. Obviously that has privacy concerns, not to mention making shopping confusing. UK generally doesn't allow ex-VAT prices to be displayed so people might have to get used to US-style pricing where VAT/sales tax gets added at the checkout. But it could be used to make VAT less regressive by creating VAT bands based on income. Then again, there has been a lot of noise about creating individual carbon allowances that could replace, or more likely supplement VAT.

Tax based on lifetime income seems a bit pointless given income is already taxed, along with additional taxes like capital gains. It sounds like a variation on US proposals to tax assets as a 'wealth tax' and tax unrealised income. Real-time property tax also seems a bit pointless and risky given propert taxes are usually annual charges.

But other than using AI to generate new tax models, it doesn't sound like it really needs AI. Plus it'd need HMRC to spend billions to implement and manage any dynamic taxing models. Like a lot of AI hype, it seems to be a soluton looking for a problem, although I guess an AI might be able to help monitor for tax evasion and fraud.

[Jimmy2Cows]

Re: This looks rather like a PTerry idea in reverse

Looking for evasion and fraud patterns seems like the only really useful possibility here, and it wasn't even implied in the article.

HMRC will surely be all over this as a way to aggressively trim their own headcount. And no doubt take it too far, so there aren't enough humans left to verify what the AI searches find.

[martinusher]

Re: This looks rather like a PTerry idea in reverse

When VAT was introduced in the early 70s to replace Purchase Tax it initially collected far too much money even though it was at the modest rate then being charged for Purchase Tax. The reason for this was that Purchase Tax was selectively levied, it was mostly on luxuries, while VAT was on everything including services -- intangibles. VAT rates were then hiked upwards to their present levels in a series of so-called emergency moves in response to some crisis or another while income tax and other forms of direct taxation were systematically reduced, especially for upper income earners. So VAT rather than being fair was actually an important tool for transferring wealth from the masses to the better off and you can bet that any further tweaks to the system will reinforce this rather than correct it. Its a natural extension to 'yield management', the practice of matching pricing of something to what the customer is expected to be able to pay but with the added bonus that the customer for taxes doesn't have any choice -- its "pay up or else"!

(BTW -- Property taxes here in the US are a lot higher than rates in the UK, they're levied on a percentage of a property's assessed worth. Unlike rates you don't have to occupy a property to be assessed for taxes -- you'll pay them whether the property's empty or not. The rates system in the UK used to be based on property assessment but the switch to banding once again favored the well off.)

[Jellied Eel]

Re: This looks rather like a PTerry idea in reverse

BTW -- Property taxes here in the US are a lot higher than rates in the UK, they're levied on a percentage of a property's assessed worth

Having been looking at property, well, land in the US, I find that system really confusing, especially as it varies by state or even county. Plus all the possible exemptions. So if I build a house or workshop on rails, is it exempt because it's not fixed property?

It also seems problematic given issues around gentrification, so because an area moves upmarket due to developers moving in, property taxes might increase and homeowners forced out. It seems a lot like the problems the UK has with developers building leasehold properties, then jacking up ground rents. Sure, a home might be an asset, but the asset value isn't realised until the homeowner sells. I think the UK system is probably fairer with a simpler banding system, but still has problems. UK complains about lack of affordable housing, but councils are incentivised to allow 'luxury' property developments because they'll generate a lot more revenue due to being in higher bands.

[tmTM]

Why AI?

They never bothered to tax the emissions on Crypto and that's far less useful.

[druck]

Re: Why AI?

I'd be quite happy if they did, lets say make it proportional to the supposed value of the scam coins.

But even if that doesn't happen it doesn't mean we shouldn't go after the obscene energy usage of AI, particularity companies that infest everything they make with supper clippy.

[Jimmy2Cows]

Re: Why AI?

Crypto is relatively niche. AI will be shoehorned into everything, whether it needs to be or not.

[UnknownUnknown]

Re: Why AI?

… and whether it works or not. Monetisation is the primary driver here, not human endeavour. NVidia share price will crash and burn soon.

Siri and her dumbass cousin Alexa need better ears, a better memory (like an album you played an hour ago and ‘don’t know about that’) and to know about facts or stuff even Yahoo! Knew 10 years ago (‘hmm .. I don’t know about that’).

It doesn’t need more smarts on gap stream garbage in.

Also take a look at a Teams audio transcription of a meeting to see how huge the horrendous the gap between reality and AI is despite Microsoft acquiring Nuance (Dragon Dictate) 2 years ago.

[Justthefacts]

Re: Why AI?

“take a look at a Teams audio transcription of a meeting to see how huge the horrendous the gap between reality and AI is”

But that’s just a consequence (at the moment) of companies price-willing-to-pay, for the CPU time. Accurate Auto-transcription of audio is basically a solved problem, cf TV subtitles. The odd wrong word, but very few. In ten years time there will be a generation who’ve never seen somebody with their head buried at a meeting taking the minutes. Gen Z will probably refuse point-blank to “manually repeat the Teams transcript”, and sue you for constructive dismissal if you ask them to. And yes I mean that literally.

Imagine what would happen in 2024, if you told a university student that not only were the lectures not being filmed, but they wouldn’t even get printed handouts. The only way they could get value from the lecture was to try and write down themselves what the lecturer was saying and writing on the blackboard, at full speaking speed. And they couldn’t take photos of the blackboard with their phones. First they’d laugh and assume you were joking. And then they’d tell you they weren’t going to pay for that, and wanted an immediate refund of all college fees. I still have my handwritten lecture notes somewhere.

[Anonymous Coward]

Re: Why AI?

The IMF don't seem to have noticed that a good proportion of the Western world already has extensive taxes and caps on CO2 emissions from power generation. And of course, because CO2 is more evil than Putin, Pooh, and Fatboi Kim all rolled up together, there's plenty more carbon taxes planned.

My favourite is the Carbon Border Adjustment Mechanism, planned by both the UK and the EU. Where the politicians opened our markets to foreign competition that wasn't subject to all the levies, regulations and costs of European businesses, that devastated European industry. That didn't matter, because cheap was good, markets and free trade were the new god, and the unemployed manual and blue collar workforce could all retrain as app developers, renewable energy engineers, web designers and so forth.

The new god is of course fighting climate change. The pols have woken from their wine fuelled slumbers and decided the way forward is to put a carbon tax on all imports. That'll make everything more expensive, and create a whole industry of CBAM compliance and CBAM avoidance or gaming, without resulting in the industries pushed offshore returning to Europe. There's a win for everyone.

[UnknownUnknown]

Re: Why AI?

For AI I’d suggest micro-royalty payments akin to UK Peeformance Rights payments for music usage - by use at big streamers, a fixed fee for small retail and hospitality.

Ensures accountability and reward for content scraped and reutilised for financial gain.

[Ken Moorhouse]

Does this prove...

...that AI is just a load of hot air?

[UnknownUnknown]

Re: Does this prove...

Are you literally standing behind a CAB full of NVidia AI tech ?