Revanth Reddy suggests ‘people credits’ tax on AI companies, draws industry concerns

Chief Minister A Revanth Reddy’s proposal to tax Artificial Intelligence firms through a ‘people credits’ mechanism to compensate for job losses has sparked concern among industry experts, who warn the idea could deter technology investments in Telangana

Hyderabad: Chief Minister A Revanth Reddy’s proposal to levy a special tax on Artificial Intelligence (AI) companies to compensate for job losses has triggered concern and confusion among industry stakeholders and experts.

The Chief Minister announced the proposal while delivering a keynote address at an AI symposium organised by the Harvard Kennedy School in Boston via video conference on Friday night.

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Highlighting the impact of technological disruption, he said that just as the industrial revolution reduced human dependence in physical labour, the rise of AI now threatens human cognitive roles. He noted that AI systems are increasingly capable of replacing a wide range of jobs.

“We will also try to create policies similar to pollution. Like polluting industries pay for carbon credits, we will make laws so AI firms can be taxed for ‘people credits’,” Revanth Reddy said.

He added that companies with massive valuations should compensate society for employment losses caused by technological advancements.

The proposal, however, has raised concerns within the technology sector, with industry observers noting that it runs contrary to prevailing global practices.

Experts pointed out that many countries offer incentives to attract AI and technology investments, and imposing additional taxes could act as a deterrent.

Concerns have also been raised about the feasibility of implementing such a tax at the State level. In the Telangana context, analysts warned that the proposal could prove counterproductive to the growth of the IT sector.

With intense competition among States to attract investments, industry experts cautioned that such measures may discourage companies from choosing Telangana as an investment destination.