AI job losses may kill income tax in five years: British bank Monzo's founder issues grim warning

Tom Blomfield, founder of the UK-based online bank Monzo, said in a recent podcast that income tax could be replaced by a levy on AI infrastructure within the next five to six years, as the technology continues to transform how companies operate and employ people.

“I don’t think we’ll tax human labour, we will tax compute, (meaning systems like) data centres, and then we will use the proceeds to pay for government," Blomfield said on The Rest is Money podcast, uploaded on Monday.

Speaking to the show host Robert Peston, he argued that AI systems are already outperforming humans in some narrow tasks and said many white-collar roles, including tax accounting, could soon require far fewer workers.

“These AI tools are performing beyond university professor level; they are actually beating humans in narrow domains. They are not yet generalizable, so they are very narrow geniuses, but the progress is happening so quickly that by the end of 2026, they will be generalizable,” he added.

To substantiate his point, he cited remarks by the CEO of Anthropic, Dario Amodei and OpenAI's chief executive, Sam Altman, noting that predictions such as engineers no longer writing code within a year have already begun to materialise.

AI takes over routine tasks

The executive's comments come amid growing concern about AI’s impact on employment, especially as tech companies race to build smarter, more efficient AI models.

During Spotify's fourth-quarter earnings call, co-chief executive officer Gustav Soderstrom noted that AI is now deeply embedded in the music platform's engineering workflow. “Our most experienced developers have not written a single line of code since December,” he said during the call.

Jobs site Adzuna reported earlier that adverts for entry-level roles were down 35% compared with November 2022, when ChatGPT was launched. Meanwhile, Morgan Stanley has also warned that Britain could be particularly exposed to an AI-driven jobs shock because of its heavy reliance on professional services, according to LBC, a news firm based in the UK.

The services sector accounted for 81% of the country's economic output last year, indicating the potential scale of disruption, the news report said.

Last week, OpenAI, the parent company behind ChatGPT, suggested in a paper that policymakers may need to shift towards imposing taxes on capital, corporate profits and long-term AI-driven returns, potentially including a “robot tax” on automated labour.

Loss of income tax likely to impact the UK govt

Income tax and National Insurance contributions remain the two largest sources of government revenue in the United Kingdom, accounting for 42% of total revenue. In contrast, taxes on capital gains, property transactions, stamp duty and inheritance contribute a much smaller share of just about 4% to the country's revenue stream, according to a report by LBC.

However, introducing taxes on AI services could prove both politically and practically difficult, the report said. Previous attempts to impose levies on major US technology companies have faced strong resistance, underscoring the complexities of taxing rapidly evolving digital industries.