If the adoption of AI results in millions of people losing their jobs, many predict the federal government will have to provide a Universal Basic Income (UBI). In theory, that does sound reasonable; however, there is a problem.
Can it afford to pay millions of people who are now out of work? That is an issue worth considering. However, let’s move on to a more serious obstacle.
The government collects taxes from workers in the form of income taxes.
That is a significant part of its revenue. If large blocks of people are unemployed, the government’s income tax revenue will decline.
The scenario of losing significant income tax revenue while simultaneously assuming large UBI payments is likely a nightmare for financial officials in our government who are planning ahead.
There is a more optimistic view of this potentially challenging financial future. The one thing we know is that humans are resourceful and have demonstrated the ability to adapt as the world has changed. That has happened since the beginning of time.
This could be a significant challenge. We will all be concerned, and when the challenge is great enough, the government will have greater forgiveness from Canadians to make any necessary adjustments.
There is a chance our government will offer Universal Basic Income. Canada will continue to prosper but depending on how the future unfolds, there could be significant changes in how our federal government manages our finances.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com.
