Monzo Income Tax: AI Could Render Traditional Taxation Obsolete

Income tax could become obsolete within five years, according to Tom Blomfield, founder of digital bank Monzo. He suggests that advancements in artificial intelligence (AI) may lead to a taxation system focused on computational infrastructure rather than human labor.

Blomfield stated, “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.” This shift comes as AI systems are increasingly outperforming humans in specific tasks, with some tools even exceeding the capabilities of university professors.

Currently, the UK government relies on income tax and National Insurance for 42% of its revenue, while capital-based taxes contribute only 4%. As AI technology continues to evolve, it is predicted that tax accounting may soon require virtually no human involvement.

By the end of 2026, AI is expected to become generalizable, which could significantly reshape the British economy. The Labour Party government may need to consider levying taxes on computing power as automation replaces traditional jobs. This concern is underscored by a 35% drop in entry-level job advertisements since the launch of ChatGPT.

Morgan Stanley has warned that the UK could face an AI-driven employment crisis more acutely than other nations, raising questions about the sustainability of current taxation methods. The biggest ever change to HMRC income tax is anticipated “within five years,” indicating a potential overhaul of the existing system.

As the landscape of work and taxation evolves, observers are keenly watching how these developments will unfold. Details remain unconfirmed regarding the specific implementation of these changes, but the implications for workers and the economy are profound.