In “How did the tax code get in such a mess?” (FT Money, May 3), Sam Freedman is right to protest at the snarl up of UK tax policy. Tug on any single thread and the whole Gothic tapestry starts to unravel. Tweak inheritance tax allowance and farmers cry foul; adjust a threshold and small business owners revolt; scrap a tax exemption and private school parents grab their pitchforks.
The Dutch finance ministry is piloting a promising alternative that flips the usual process on its head. Instead of politicians suggesting a tax change and then leaving it to civil servants to model the fallout, their new tool works in reverse: input intended outcomes, and let the system work out how to get there. For example, ask it to raise an extra £8bn in revenue without affecting anyone under 27 who has children and isn’t a homeowner. The tool’s architects say that it will sift through 1.2 quadrillion (1,200,000bn) possible tax combinations to settle on an optimal path. This reverse-engineering approach would let politicians tweak the tax code — while capping the financial hit on any one group, measured as a share of their spending power. Of course, constituencies that see their taxes rise would still grumble. But it would give politicians a convenient — and honest — argument that any tax rebalancing is fair. The result would be a more equitable, goal-directed tax blueprint that achieves political and fiscal objectives with less complexity. This tool offers a way to break the UK’s tax reform deadlock and design a fairer system. Labour is looking at Denmark for its immigration policy, but would be wise to look even closer, to the Netherlands, for tax reform.
Stella Tsantekidou
London SE1, UK
