IMF Sounds Alarm Over AI’s Threat to Government Tax Bases

The head of the International Monetary Fund has warned financial ministers that widespread AI adoption could erode tax bases across the world as incomes are squeezed by the technology. Kristalina Georgieva, the managing director of the IMF, said governments may be ill-prepared for a potential slump in tax revenue brought on by AI’s impact on the labour market. At the fund’s summit in Bangkok, Georgieva has issued a series of warnings on the impact of AI, calling the technology a “slow-moving tsunami” that could affect 60 per cent of jobs in wealthy countries. In a blog post on Thursday, Georgieva suggested governments would need to “make hard choices” and implement vast tax reform to shift revenue streams from labour to other areas such as land or investment. “AI may raise growth, but it could also reduce labour income, increase inequality, and erode the tax base,” Georgieva said. “Countries will need fiscal space to invest in infrastructure and skills, and cushion the impact on the most vulnerable. And they will need tax systems designed for the AI era. “With debt already high, policymakers will need to make hard choices.” AI’s toll on the tax system In the UK, income taxes account for more than a quarter of total tax receipts. National Insurance paid by workers and employers is another large revenue-raiser, accounting for about 16 per cent of total receipts in 2025-26. Revenue is also largely made from levies on the highest earners as the top one per cent pay about 28.5 per cent of all tax. Former Chancellor Rachel Reeves announced the launch of the UK’s AI Economics Institute, which is being led by Nobel prize winner Professor Simon Johnson, in order to evaluate and manage the effects that the technology could have on fiscal policy. Oxford professor Ben Ansell weighed in on the debate by proposing an “AI token tax”, which would be a levy on the use of models. The Austrian-American economist Anton Korinek, who sits on Anthropic’s economic advisory council, has said that governments should transition from income taxation to consumption taxation. In her warning on AI, Georgieva also said that there could be a fall in stock prices that “cascades through the highly leveraged and circular AI ecosystem”, with losses “spread around the world”. Her statements echo those of Financial Stability Board chair Andrew Bailey and Bank of England deputy governor Sarah Breeden, who predicted there would be a “correction” in market pricing if company profits disappoint following years of heavy capital investment in AI. Risks to AI firms and governments come at a tumultuous time for the global economy given ongoing conflicts in Ukraine and the Middle East and low growth in Western economies. The IMF urged European countries to avoid imposing more protectionist measures, after its ‘Made in Europe’ scheme – designed to boost domestic manufacturers over imports from China – has come under the spotlight. Economists advised European leaders to dismiss “rising calls for more interventionist industrial policy” as they would not “durably address Europe’s underlying growth problem”. Given large deficits in various major economies across the continent, ministers were also urged to only provide energy support packages that were “tightly targeted at supporting the most vulnerable”. By City AM More Top Reads From Oilprice.com

One Friday evening this summer, a private chef prepared a three-course meal — burrata salad, baked salmon, and tiramisu — for two friends and me. The dinner was free, but there was a catch. A camera mounted on Chef Aliser Demir's baseball cap was recording everything. Demir came to my apartment through Shift, the data-collection arm of the German startup Microagi. The startup offers free private chefs in San Francisco in exchange for first-person footage of their work. Shift offered to pay Demir, who runs a private chef business, his usual rate of $100 to $150 per person. "I've been feeding people since I started this job," Demir said. "Now I am also feeding AI." This story is part of a series called The AI Data Grab, an inside look at how tech giants are increasingly turning to workers, users, and the physical world to get data to train AI. Read more stories in this series here. Demir is part of a global effort to collect data on how humans interact with the physical world, with the goal of building machines that can staff factories, clean homes, and even fight wars. Elon Musk, who is betting Tesla's future on the humanoid robot Optimus, has promoted a utopian future of "sustainable abundance," in which AI and robots make human labor largely optional. Shift pays more than 35,000 people to record physical tasks, from cooking meals to repairing engines. Courtesy of Shift For now, those ambitions face a problem: a massive shortage of training data. "It is widely agreed in the robotics world that data is the key bottleneck," said Kyle Chan, a fellow at the Brookings Institution who studies technology and industrial policy. This is the third installment of the AI Data Grab, Business Insider's series on how human work is becoming raw material for AI — and the companies that are cashing in. So far, we've reported on how AI labs are buying up employees' emails and Slack messages, and how law firms are turning decades of human expertise into AI systems. Now, the scramble is moving into the physical world, where companies are paying people to record skills robots have yet to learn. Shift collects data in more than 15 countries to capture a broad range of tasks and environments. Courtesy of Shift Contract workers in Mexico and the Philippines remotely control robots in American warehouses as they pack beauty products, recording movements so the machines can eventually do the work on their own. Other workers across the world strap cameras to their foreheads to capture first-person footage of themselves folding laundry and making hotel beds. "This is how the great knowledge transfer happens from humans to robots," said Josh Gruenstein, CEO of Tutor Intelligence. His company operates a Massachusetts "data factory" where workers remotely control robots to generate training data. A booming data market A teleoperator at Encord’s Bay Area facility guides a robot through arranging flowers in a vase. Rya Jetha/ BI Demand for robot training data is roughly 10 times higher than a year ago, Vineeth Velmurugan, who leads robot learning at the AI data startup Encord, said. Encord's customers, including Dyna Robotics and Agility Robotics, once requested 1,000 hours of annotated data. Now they want 10,000 or even 100,000, he said. That red-hot demand for real-world data comes as robotics has become one of Silicon Valley's hottest bets. Humanoid robot makers Figure AI and Agility Robotics have fetched multibillion-dollar valuations, as have the companies developing robot "brains" such as Skild AI and Physical Intelligence. Robotics companies raised $33.4 billion globally in the first half of this year, according to PitchBook data, surpassing the $28.7 billion raised in all of 2025. Cheaper hardware and computing, better AI models, labor shortages, and competition with China are all fueling investor interest. But a gulf remains between robots that perform impressive demos and machines reliable enough to work an eight-hour factory shift. Robotics companies hope more training data will help, and suppliers across the world, from scrappy startups to established companies like Scale AI, Instawork, and Uber, are rushing to sell it to them. Custom hardware is key to recording the physical world. Mecka AI, which has raised more than $120 million from investors including Sequoia and Nvidia, started with an app that paid people to record everyday activities two years ago. But the company soon ran into the limits of ordinary video. Mecka now designs headgear and sensor-equipped gloves to "sensorize humans," CEO Josh Gao said. The equipment records movements and force, such as the pressure needed to grip a glass or crack an egg. Contractors label workplace footage before Mecka sells it to AI labs and robotics companies. Explore BI Games Take a smarter break in your day - and see how far you get. Play now Want more Business Insider in your news feed? Add BI in Google so our reporting is easier to find when you’re searching for what matters. Add to Preferred Sources A teleoperator at Encord’s Bay Area facility controls a robot as it pours motor oil into a container. Rya Jetha/ BI Microagi, the parent company of Shift, is expanding its collection efforts into homes and workplaces across more than 15 countries. It pays more than 35,000 people to record themselves performing physical tasks, CEO Bercan Kilic said. Shift said participants can earn up to $30 an hour and that it has paid out around $10 million in 2026. Household chores are the most common, but unusual tasks help expose models to unfamiliar situations. One contributor in Turkey records himself repairing old jet engines in his garage, Kilic said. Kilic's goal is to gather enough data to build robots that can work in factories and address labor shortages in Europe and the US. "If you run factories, the math is already on your desk," Kilic previously told Business Insider. "Your most experienced people retire this decade, and their replacements were never born. Reshoring only works if the robots do." Income today, automation tomorrow For the workers supplying that data, though, the trade-off is income today in exchange for helping build machines that could eventually automate their work. Demir, the private chef, said he believes his work is safe. "Machines can just watch, listen, and follow instructions," he said. "They cannot feel or smell." The economics are different in countries where labor is cheaper. Human Archive, a data collection company based in San Francisco, began building operations in India last year through partnerships with gig platforms, hotels, and plumbing and electrical businesses. It started with an app that let people record audio and first-person video. The startup now also makes custom hardware in China, including camera-equipped headsets and wrist trackers that capture movement. Today, it operates in more than 30 countries and pays workers between $1 to $10 and "even much more," per hour, depending on how disruptive the equipment is, CEO Raj Patel said. These workers, Patel said, could earn "almost as much, or more [than their regular jobs], to just wear these devices." Mecka and Human Archive did not say how they ensure workers' consent when collecting data through partner businesses or local contractors. Shift said participation is voluntary, and some employees at partner businesses choose not to participate. The company said it obtains explicit consent, explaining what data is collected and how it is used, including that it may be licensed to other labs for AI and robotics training. The global competition for data work can come with a downside. It drives down wages and leaves workers with little bargaining power, said Mark Graham, a professor at the Oxford Internet Institute and author of Feeding the Machine, a book about the labor behind AI. "Often the workers don't even know what they're doing," he said. "They're a very disposable appendage of a much bigger machine." The work can also be physically taxing. One operator who remotely controls robots in US warehouses from a Texas facility previously told Business Insider that eight-hour shifts cause arm and shoulder cramps. "We even have a massage gun in the office," they said. Will the data boom last? The companies collecting all this data are betting that the quest to train intelligent robots will fuel demand for years to come. Research firm Mordor Intelligence projects that the broader AI training dataset market will grow from $11.9 billion this year to nearly $49.8 billion by 2031. For robotics data suppliers, the bull case is that startups will spend a significant share of their funding on training material, said Siddharth Ramakrishnan, a partner at Scale Venture Partners. "If scaling laws continue to work, the pie will just keep growing," he said. But nobody knows how much data robots will need to work reliably, he added. If they need less than expected, data suppliers could lose business. If they need much more, investors could tire of paying before the robots become commercially viable. Some are betting that demand for robot training data is nowhere near its peak. Encord's Velmurugan likens today's robot brain to that of a two-year-old, and estimates that training a robot to work in homes — one of the hardest environments because it is so unstructured — could require a dataset five times the size of YouTube. At the end of 2025, YouTube held an estimated 29 billion videos, the equivalent of 280,000 years of footage, according to research firm Omdia. UC Berkeley roboticist Ken Goldberg. Florian Gaertner/Getty Images "It's hard to say how this will play out," Ken Goldberg, a UC Berkeley robotics professor and cofounder of warehouse robotics startup Ambi Robotics, said. "It might take five years or 50 years. And even if we had unlimited data now, I don't know if this approach will work," he said. Training robots in virtual environments, known as simulation, could also chang

AI safety is having a moment. After years as a topic for techies and futurists, the potential risks from artificial intelligence systems – from cyberattacks to hyper-persuasion to rogue behavior – are suddenly under discussion both in the corridors of power and around kitchen tables. In fact, the conversation now reaches beyond classical safety concerns, getting into AI’s impact on economic life and the environment, as well as possible responses, from alignment research to government regulation. This expanding public discussion is coming none too soon, as recent news about AI security breaches makes clear. However, something important is still missing. For all its vibrancy, the public debate has not yet focused on one of the most important requirements for AI safety: constitutional democracy. To see why democracy matters for AI safety, imagine that we have already built a powerful AI system that is “safe” in all the now-familiar senses: it cannot escape human control, cannot launch cyberattacks or make bioweapons, and cannot power killer robots. Now picture that system in two different political contexts, one democratic, the other authoritarian. Placed inside a healthy democracy – a constitutional republic, with free and fair elections, protected civil liberties, and robust rule of law – AI could bring massive benefits, advancing science and medicine, expanding education and bolstering economic prosperity. Under the right conditions, AI could strengthen democracy itself, helping citizens make their voices heard, improving policymaking and making government services more efficient and accountable. Now consider the authoritarian scenario. Here, everything flips. AI becomes a tool for government surveillance and censorship, for propaganda and for political suppression and entrenchment. No imagination is required to conjure this scenario. It is already playing out in China, Russia, Iran, Venezuela, several Gulf states and elsewhere. Placing these two scenarios side by side reveals an elemental truth: there can be no such thing as safe AI unless we secure the future of constitutional democracy and the rule of law. It doesn’t matter how “safe” your AI is if you live under authoritarian rule; you will not be safe. In short, AI safety requires political freedom. Once this fact sinks in, it becomes clear that we must reverse the retreat of democracy that has occurred around the world over the past two decades, including, here at home, the steady erosion of constitutional checks under administrations of both parties. Of course, preserving democracy has always been a worthwhile goal. With the AI era looming, it has become an urgent one. To complicate matters, AI itself will put new pressure on democratic institutions. As AI starts to affect jobs, the resulting economic insecurity may create openings for demagogues of every stripe. By creating national security crises – cyberattacks, for example – AI will multiply opportunities for governments to invoke emergency powers, powers that, once claimed, are rarely relinquished. And as AI is integrated into executive-branch functions, traditional checks and balances may be disturbed, and the risk of political surveillance will grow. In the longer term, if AI replaces a majority of jobs – an outcome that economists such as Daniel Susskind and Anton Korinek are concerned about – ordinary citizens will face a serious risk of losing their leverage over those who govern them. To see why, we need only look at present-day petrostates, where governments that do not depend on taxing their citizens’ work often disregard those same citizens’ rights. A solid first step toward countering these risks would be to update our legal codes, setting limits on executive power by reforming emergency and surveillance law, and ensuring due process by narrowing the circumstances in which the state secrets privilege may be invoked. In the US, this would mean, for example, revisiting the National Emergencies Act and International Emergency Economic Powers Act, and closing the “data broker” loophole in intelligence work. As executive agencies begin to leverage AI, we should also furnish Congress and the courts with equally powerful AI tools, so that their oversight can keep pace. The principle here is not new. As James Madison wrote, “Ambition must be made to counteract ambition,” only here in a digital setting. Longer-term, to avoid widespread political disempowerment, we will need to renew our traditions of self-government, involving citizens more directly in policymaking and government oversight. If we play our cards right, AI itself may help, making information easier to access and helping citizens reason together – town halls for a digital age. Buttressing political freedom in these ways would be important in its own right. Today, however, it is also a form of AI safety work. Who is best positioned to drive the needed reforms? Policymakers, civic organizations and ordinary citizens must all participate. But there is another key player: the AI industry. While the major AI labs are willing to weigh in on specific policy issues, most have recently gone quiet on the topic of democracy itself. Over the past year, a number of AI-industry leaders have justifiably stressed the need to equip military and intelligence agencies with AI, so that democracies can compete abroad. But the same leaders have been conspicuously absent from the debate over the health of democracy at home. The tech sector was not always so reserved. In 2013, Apple, Google, Microsoft, Facebook, Twitter, Yahoo, LinkedIn and AOL joined forces to publish an open letter to the president and Congress, stating that government surveillance methods had “tipped too far in favor of the state and away from the rights of the individual – rights that are enshrined in our constitution”. In 2018, Microsoft publicly asked Congress to limit government use of facial recognition technology, writing: “We must ensure that the year 2024 doesn’t look like a page from the novel 1984.” And as recently as 2021, companies including Alphabet, Amazon, Apple, Facebook, IBM, Microsoft and Twitter published an open letter opposing proposed changes to state voting laws, declaring: “We stand for democracy.” More recently, however, many tech companies have fallen silent. This is understandable. These companies answer to their investors, and in the current environment, speaking out can put shareholder value at risk. That, however, should not be the end of the story. The leading AI labs all describe AI safety as core to their mission. If they mean what they say, then – for the reasons I’ve highlighted – they bear a duty to stand up for basic constitutional principles, despite the commercial risks. Journalists, researchers and ordinary citizens can help them recognize that duty by insistently pointing out the connection between safety and freedom. It is good that people outside the AI industry are suddenly talking about AI safety. AI will affect everyone, and everyone should be involved in shaping how it is built and used. But we need to make political freedom a centerpiece of the discussion. We need to build public awareness that AI safety fundamentally depends on democracy. Only by bearing this point firmly in mind can we avoid the dangers of AI and reap its potentially immense benefits.