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I was having dinner with three of my best friends a few years ago when one of them pulled out his phone to show us the just-released ChatGPT, the large language model artificial intelligence application. It was amazing. All of our jaws dropped. “And this is just the beginning,” he said.

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He was bang on. The rapid pace of AI applications is truly astonishing. Since that day in November 2022, I have been very interested in how AI can help me become more efficient in my work — and it has.

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Accessing quick answers to difficult questions, using it as a search engine replacement and coming up with ideas have been game-changing. In the professional realm, I routinely use AI applications such as Ask Blue J to help with my tax research. ChatGPT, Ask Blue J, Grok and others have transformed how I conduct tax research and they’re very good overall on the accuracy scale — not perfect, but very good.

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I often get asked if AI will replace tax advisers such as me. My usual answer is a qualified “no.” AI has, to date, made my job more efficient, but experience and empathy still count for something. But we’re not very far away from AI replacing human beings for repetitive tasks such as bookkeeping and preparing financial statements.

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Ditto for tax administration. It is conceivable that a lot of the assessment functions, audits, reassessments, collection matters and other routine Canada Revenue Agency functions could be replaced by AI at some point soon. Yes, I’m aware of the data risks.

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From an overall jobs perspective, as in the tax realm, AI will likely replace repetitive jobs. For example, have you seen Tesla Inc.’s Optimus robots that are in the testing phase? Truly amazing technology.

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Will the job losses triggered by AI result in a shifting of jobs to where human beings are truly needed (such as personal or health care) rather than a permanent loss? Of course, the pace and permanence of these losses remain unknown, but economic history leans toward reallocation over obliteration.

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What does the proliferation of AI mean from a tax policy perspective for our country? Well, like most countries, Canada heavily relies on taxing the labour of our residents. Of the $459.5 billion that our federal government collected in revenues in 2023-24, $217.7 billion — 47.4 per cent — was from personal income taxes.

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Historically, wages and salaries account for about 60 per cent of personal income tax revenue. Accordingly, if AI were to significantly erode that 60 per cent of taxation revenue, the government could lose billions.

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For example, if AI takes the job of a factory worker who earns, say, $80,000, there is less personal tax revenue for the government if that job loss is permanent. If that worker finds a similar-paying job in another industry, then there’s no net loss in taxation revenues. Some, however, are convinced that the job losses will be permanent. If so, then the taxation revenues will also be permanently reduced.