ChatGPT or Google

ChatGPT or Google 

July 2024  

AI - Artificial Intelligence

There is a mass of chatter about AI these days and it seems that you have to claim it is used on all things you create to be in vogue. A lot of claims for AI are in my opinion just advanced form of algorithms.

I have experimented with the free version of ChatGPT, both web based on MacBook and also using the iPad App. I have created web pages, Python programs, maths solutions and children stories, all of which I consider to be real examples of AI.

I am now considering whether it can be used as a first goto option for general queries that typically I would default to using Google. It will quickly provide an answer in a simple, clean text format. (Probably if I paid for latest version of ChatGPT it may include images and videos.)

Example

I asked the following question

“If UK increased base tax rate by 1% how much revenue would it create?”

The response was:


To estimate the additional revenue generated by a 1% increase in the base tax rate in the UK, we need to consider the following factors:


  1. Current base tax rate and applicable income bracket: The base tax rate (also known as the basic rate) in the UK is 20%, applicable to taxable income between £12,571 and £50,270.

  2. Number of taxpayers and their income distribution within the base rate bracket: We need to know the number of taxpayers and the total taxable income within this bracket.

  3. Current revenue from the base rate: Understanding the existing revenue helps gauge the impact of a rate change.


According to the latest data:

  • There are approximately 31 million taxpayers in the UK.

  • A significant portion falls within the basic rate band.

  • Total revenue from income tax is around £200 billion annually, with a substantial part coming from the basic rate taxpayers.


To calculate the additional revenue, we can:

  1. Estimate the total taxable income within the base rate bracket.

  2. Apply the 1% increase to this income.


Here’s a step-by-step outline:

  1. Estimate Total Taxable Income in the Base Rate Band:

    • Average taxable income per taxpayer in the base rate band.

    • Number of taxpayers in this band.

  2. Calculate Additional Tax Revenue:

    • Multiply the total taxable income by the 1% increase.


Let’s assume:

  • There are 20 million taxpayers in the basic rate band.

  • The average taxable income in this band is around £25,000.


The total taxable income in the basic rate band would be:

  20  million taxpayers x £25,000 = £500 billion


An increase of 1% in the base tax rate (from 20% to 21%) would generate additional revenue of:

  £500  billion x 0.01 = £5  billion}


Thus, a 1% increase in the base tax rate could potentially generate an additional £5 billion in tax revenue annually. This is a simplified estimate and the actual figure might vary based on detailed income distribution data and other factors such as behavioural changes in response to the tax increase.

This is what I mean by a clean text based response. But is it correct? To check this I asked the same question in Google. Its answer was $5.5 billion, so both answers appear similar. 

The link I followed from Google was publication.parliament.uk The relevant section is also copied below together with an informative pie-chart showing how tax is raised.

HMRC provides an illustrative guide to the direct impact of tax changes on revenues, which shows that:

  • A 1p increase in the basic rate of income tax would raise £5.5bn in 2022/23 (0.2% of GDP), and a 1p increase in the higher rate would raise £1.3bn in 2022/23 (0.1% of GDP);

  • A 10% cut in the income tax personal allowance would raise £8.8bn in 2022/23 (0.4% of GDP);

  • A 1% increase in Class 1 national insurance contributions would raise £4.3bn in 2022/23 (0.2% of GDP); 

  • A 1p increase in the rate of VAT would raise £6.7bn in 2022–3 (0.3% of GDP)

Source Of Tax Revenue 2019-20


Conclusion

The result of ChatGPT was very concise and clean, but when copied and pasted into this site the formatting was lost. Line items in lists were just contiguous text and I had to use screenshot instead.

In checking the answer with a Google query I stumbled upon a very authoritative article with a lot of interesting facts about implications of tax increases. Although this has merits it did lead me into an additional 45 minutes of analysis which I did not intend.

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