Monzo Founder
The rapid rise of artificial intelligence (AI) is beginning to reshape not just jobs, but the very structure of global economies. Tom Blomfield, founder of the UK-based digital bank Monzo, has warned that traditional income tax systems could become obsolete within the next five to six years.
Speaking on The Rest is Money podcast, Blomfield suggested that governments may soon shift away from taxing human labour and instead focus on taxing computing power. This could include levies on data centres and AI infrastructure. According to him, as AI continues to replace human roles, governments will need to rethink how they generate revenue.
AI Advancing Faster Than Expected
Blomfield emphasized that AI technology is evolving at a much faster pace than many had anticipated. He pointed out that AI systems are already outperforming humans in several specialized tasks, particularly in white-collar professions.
While current AI tools are still limited to specific functions, their capabilities are expanding rapidly. Blomfield believes that by the end of 2026, these systems could move beyond being “narrow experts” to becoming more generalized in their abilities.
He also referenced insights from leading AI figures like Sam Altman and Dario Amodei, who have suggested that the role of human engineers may significantly diminish as AI begins to handle coding and complex problem-solving tasks.
Early Signs of Job Disruption
The impact of AI on the job market is already becoming visible. Many companies are increasingly integrating automation into their workflows, reducing reliance on human workers for routine tasks.
At music streaming giant Spotify, AI has become a core part of engineering operations. Co-CEO Gustav Söderström recently noted that senior developers have, in some cases, stopped writing code themselves, relying instead on AI-driven tools.
Meanwhile, job search platform Adzuna reported a 35% drop in entry-level job postings since the launch of ChatGPT in November 2022, highlighting the growing impact of automation on early-career opportunities.
UK Economy Could Be Hit Hard
According to investment bank Morgan Stanley, the UK may face a disproportionate impact from AI-driven disruption. This is largely because around 81% of the country’s economic output comes from professional services—sectors that are particularly vulnerable to automation.
Rethinking Taxation in the AI Age
As AI continues to transform industries, policymakers are beginning to explore new taxation models. OpenAI has suggested that governments may need to shift toward taxing capital, corporate profits, and AI-generated income rather than human wages.
Ideas such as a “robot tax”—a levy on automated labour—are also gaining attention as potential solutions to offset declining income tax revenues.
A Major Revenue Shift Ahead
Currently, income tax and National Insurance contribute roughly 42% of the UK government’s total revenue, making them its largest funding sources. In comparison, taxes on capital gains, property, and inheritance account for only about 4%.
However, experts caution that implementing taxes on AI infrastructure or digital services will not be easy. Previous attempts to tax large technology companies have faced strong resistance, underlining the political and practical challenges of regulating fast-evolving digital sectors.
Conclusion
While AI promises increased efficiency and innovation, it also poses serious challenges to traditional economic systems. If current trends continue, the coming years could see not only a transformation in the nature of work but also a fundamental shift in how governments collect revenue.
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