Consensus Without a Deed — Statecraft

On the diagnosis there is no dispute. Experts have called the Dutch tax system needlessly complex for years. Virtually every party puts simplification in its election manifesto. The coalition agreement of the current cabinet — the negotiated programme that binds Dutch governing parties for the parliamentary term — calls the tax and benefits system opaque and unpredictable and promises a reform agenda by the end of 2026. At the Ministry of Finance lies a pile of studies, advisory reports and negative evaluations that establish in detail what does not work, up to and including the ministry’s own overview from this year, in which schemes worth some ninety billion euros are assessed negatively: they miss their goal, cost too much for what they achieve, or are too complex to administer. And since the last major overhaul of the income tax, in 2001, now a quarter-century ago, there has been no change to the system on that scale.

That is the real puzzle, and it is not a fiscal one. A system that disputes the diagnosis can be persuaded. A system that does not know the diagnosis can be informed. But a system that shares the diagnosis, has the solution in its own reports, and still does not act for twenty-five years has a problem of a different order, and it is precisely the problem that is almost never posed separately in public debate. It is the question of why a system cannot carry out the reform it agrees on. That is the implementation question, and it belongs to public administration, not to tax policy.

From design to transition

The entire tax debate is parked on the wrong question. All intellectual energy goes into the design: which deduction must go, which rate must rise, which exception can be justified. But good designs exist in abundance. From the flat tax to the dual income tax, from a consumption base to broad base-broadening, the variants lie ready and have been costed. The scarce good is the transition. Reform does not founder on the drawing board; it founders at implementation, and that distinction is the core of everything that follows.

Anyone who has worked on the execution side recognises it at once. The problem is usually the landing. A reorganisation fails because the movement from the old situation to the new has a logic, a timescale and a risk of its own that are invisible in the design. Tax reform is the national version of this. Moving the analysis from the design to the transition is a shift of level, and it is the level at which the question can actually be answered.

Where the tension sits

Mark Moore’s strategic triangle, the public-management framework from Creating Public Value, offers the sharpest way to see where a public task gets stuck. Every task stands on three corners at once: the public value it seeks to create, the operational capacity to execute it, and the political legitimacy that covers its back. Failure rarely arises because all three fall short, and almost always because one corner can no longer carry the other two.

Hold tax reform against that triangle and there turns out to be not one binding corner but two, which moreover reinforce each other. Public value is the only corner that does not pinch: that a simpler, more effective system is worth having is the consensus with which this piece opened. But the other two corners both bind. Political legitimacy cannot be held for the time execution requires, and that is a problem of legitimacy in its temporal form, to which the sections below turn. And operational capacity is not, as is conveniently assumed, a concern that resolves itself after 2029, but a hard constraint in its own right: the Tax and Customs Administration, the Dutch tax authority, simply could not handle a thorough reform at this moment. The two corners reinforce each other, for building execution capacity demands precisely the long-term attention and stable funding that the temporal legitimacy corner does not supply, and the knowledge that the service cannot handle it in turn undermines the political will to begin. To understand the reform, therefore, you must first face the corner most readily waved away in the debate: execution.

The execution that could not do it

Suppose politics rallied behind a thorough reform tomorrow, with compensation reserved and a majority that dares to name the pain. Even then the reform would founder, for the executor cannot execute it. The Tax and Customs Administration simply could not cope with a system change of this magnitude at this moment. The NRC article that occasioned this piece notes in passing that merely introducing one new wealth levy — the repair of box 3 — takes years and a great deal of manpower. Box 3 is the Dutch capital-income regime that taxes an assumed rather than actual return on savings and investments; the Supreme Court of the Netherlands struck it down in its Christmas judgment of 2021, and the state has been running a repair operation ever since. A full revision is a multiple of that. A reform means years of rebuilding systems, retraining people and rewriting processes, and the service that would have to carry it is struggling with outdated IT, with staff shortages, with the aftermath of the childcare benefits affair — in which this same administration wrongly branded tens of thousands of parents as fraudsters — and with the laborious wealth levy that is already eating its capacity. There is no spare capacity to carry out the transition. Execution is a wall that stands there before politics begins.

And that incapacity is itself a congealed outcome, produced by precisely the pattern the reform is supposed to break. Around 2001 the Tax and Customs Administration was considered a digital pioneer, with self-developed IT and its own data centres. Precisely that reputation meant the service kept being assigned more tasks — including, at political insistence and despite warnings about feasibility, the payment of the toeslagen, the income-dependent benefits for childcare, housing and health care — and those tasks were stacked onto the organisation without the architecture that had to support them changing with them. That is absorption without integration at the level of the executive organisation itself: a service that absorbed assignment after assignment until the underlying structure gave way. The executor that is supposed to simplify the system has been hollowed out by precisely the complexity it is supposed to clear away. The service that must lift the burden is the service the burden has broken.

There is a trap in this, and it marks the entire task. A simpler system would ultimately relieve the service, for fewer schemes and fewer exceptions mean less to execute and less to explain. Execution is thus at once the strongest reason to reform and the reason it cannot be done: the capacity needed to reach the simpler system is swallowed by the complex system one wants to leave. Waiting until after 2029, when the IT may be in better shape, is therefore no answer, for the recovery of capacity and the reform compete for the same scarce resources, and as long as the complex system keeps growing — as Part I showed — the service loses ground faster than it regains it. The operational corner is a second lock beside the political one, and it must be designed as part of the transition rather than reasoned away. A reform planned without first enabling the executor to carry it is a law no one can implement.

Why that legitimacy is so hard to hold was put succinctly in the source article by Klaas Knot, former president of De Nederlandsche Bank, the Dutch central bank. Special interests organise en masse, while the general interest is felt more weakly, and whoever profits from simplification barely notices the gain and therefore organises poorly. That is the logic of collective action, and it has a hard consequence for implementation. A reform cannot be carried by the general interest alone, for that interest has no constituency that makes itself felt at the negotiating table. It must win the consent of the losers, and those losers are concentrated, organised and motivated, while the winners are diffuse and silent.

From this it follows that a thorough reform cannot proceed step by step. Anyone who clears away scheme after scheme gives every organised loser the full stage in turn, and loses each time on the file that happens to be on the table. The mortgage-interest deduction stays because one party has made it a totem. The business-succession scheme — the relief that lets family firms pass to the next generation largely untaxed — stays because the family businesses make themselves heard. The agricultural exemption stays because the farmers make themselves heard. Each separate fight is a fight against a concentrated interest, and the general interest does not show up. The only way out is the grand bargain, in which so much changes at once that the losers cannot dig in one by one and in which different blocs each win something. But the grand bargain requires a craft, and then money, and the current system lacks both.

The craft of concentration

How the grand bargain must be shaped is a political question, and the answer is counter-intuitive. The accountant would say: cut the many small items, for each amount is small and the pain per item therefore slight. But the political arithmetician knows that the measure is the resistance per item. Fifty small cuts produce fifty mobilised groups, fifty evenings of public objections, small grief adding up to a politically impossible sum of resistance, while the yield remains slight. One large cut produces one fight, heavier because the pain is real, but bounded because it is one front and not fifty. The art is to concentrate the number of fronts, for concentrated resistance is governable and dispersed resistance is not.

In a budget-cutting task at a municipality in the range of fifty to two hundred and fifty thousand inhabitants, the blow was deliberately placed on a few large items for precisely that reason, while the many small subsidies were left untouched. Every small item brought its own speaker at the council’s public hearing, its own letter and its own story before the municipal council, and the sum of those evenings would have made the decision ungovernable. A few instances of great pain proved bearable where a great deal of small grief was not. That is the action perspective the reform debate lacks: the grand bargain works because it bundles the fronts instead of multiplying them.

But concentrating the blow is efficient, not neutral, and that honesty belongs in the account. The large items are large because many people or much interest hangs on them, so the blow lands hard on a well-defined group, while the small beneficiaries survive purely because they were too small and too numerous to tackle. The measure then becomes governability, not justice, and that is defensible as long as one names it and misleading as soon as one pretends the two coincide. Sometimes the large item coincides with the least defensible expenditure, and then the choice is doubly good. Sometimes the large item is precisely the most valuable provision, large because it serves many, and then one cuts into the most valuable precisely because it is visible and concentratable, while marginal items survive under the radar of feasibility. The countability trap lurks here too: the size of the item, not its value, determines whether it is hit. That is why the craft demands a second test beside governability, namely whether the large item chosen for reasons of feasibility is also the item one would defend on substantive grounds. Where the two coincide, the intervention is feasible and good. Where they diverge, one buys feasibility with quality, and then the concentration is a necessary evil to be accounted for rather than a virtue to be sold. That distinction — wielding the asymmetry or hiding behind it — is what is called political craftsmanship.

Concentrating the fronts is thus the first part of the craft. The second is that the concentrated loser who remains still suffers real pain, and that his consent must be bought with money reserved in advance. How that works, and why it is now missing, is shown by the previous major reform.

The earmarked grease money

When Finance Minister Gerrit Zalm and State Secretary Willem Vermeend — the state secretary being the junior minister in a Dutch ministry — pulled the 2001 reform across the line, they gave it a net tax cut of five billion guilders, roughly 2.3 billion euros in the pre-euro Dutch currency, money to soften the pain for groups that would otherwise be hit disproportionately. And they made sure each camp won something: a cut in the top rate that benefited the constituency of the conservative-liberal VVD, and an earned-income tax credit that appealed to the constituency of the social-democratic PvdA. The press called it Purple pragmatism — Purple being the nickname of the coalitions in which those two parties governed together without the Christian democrats. What it was in public-administration terms is the purchase of consent: the organised losers were compensated, and the organised winners received a visible gain, so that the reform could count on support from left to right.

The current cabinet reserved no money for tax reform during the coalition formation — the negotiation in which Dutch cabinets are assembled and their budgetary room is fixed — and the coalition agreement does not name how much pain, and for which groups, it is prepared to accept. That is the absence of the only known instrument against the asymmetry of consent. Without reserved compensation there is no mechanism to overcome the organised losers, and the reform falls back into the step-by-step route that founders by definition. The bargain is the only proven technology for breaking the collective-action blockade, and it costs money that must be fixed in advance, in the agreement. Anyone who says they want to simplify but reserves no compensation has stated the will and omitted the instrument.

The horizon

There is a second condition the current system structurally lacks, and it concerns time. The 2001 reform did not begin in 2001. As early as 1997 Zalm and Vermeend announced the outline of their plan, and it was implemented only under the next cabinet, a cabinet of the same coalition, with the same Minister of Finance. A thorough system change spans two cabinets, for the legislation, the execution and the working-through demand more time than one cabinet term offers. Experts estimate that a major reform probably needs two cabinets before legislation can genuinely be set in motion.

And here the reform’s requirement collides with the reality of Dutch politics, for cabinets — always coalitions in the Netherlands — fall ever more often: since 2002 only one cabinet has served its full term. A reform that requires two consecutive cabinets on one line cannot be anchored in a culture that no longer delivers two consecutive cabinets on one line. The horizon of the task exceeds the horizon of the power that must carry it. That is a structural mismatch between the time a system change needs and the time a cabinet on average gets, and it means that political legitimacy, the third corner of the triangle, falls away at precisely the moment execution needs it most.

The anchoring question, applied to the reform

Here comes the sharpest point, and it touches the core of what anchoring means. In this corpus, anchoring is the question of what stands when no one is looking, and the test that separates documents from carriers: a decision on paper is not yet a decision carried through time. Tax reform is usually conceived as a legislative task: once the law is passed, the reform is a fact. But the recent history of box 3 shows that even a passed law is not anchored. That law was passed by the House of Representatives after more than two years of work, and before the Senate had dealt with it, shortly after State Secretary Eerenberg took office, Minister Heinen declared that the plans had to go back to the drawing board. On Prinsjesdag 2026 the promised repair did not materialise, and the cabinet asked the Senate to suspend its consideration until the Spring Memorandum of 2027. A reform that survives the vote but not the next officeholder is not anchored. The passage of a law is then an interim score.

That changes what the carrier of a reform actually is. A law can be reversed within a single cabinet. What carries a reform is the political coalition and the execution capacity that keep it standing after the officeholder who conceived it has left. The anchoring question, applied to the reform, is therefore what carries the reform beyond one minister, one cabinet, one election campaign and one totem. And that question is almost never asked in the reform debate, because the debate is fixated on the design and on the passage, while the working-through that follows — the phase in which most reforms die — stays out of view.

In interim practice this is the most recognisable failure there is. In assignments at municipalities in the range of fifty to two hundred and fifty thousand inhabitants, in the social and the physical domain, the outcome is the same every time: a transformation that stands as long as the alderman — the member of the municipal executive — or the director who carried it is present, and that springs back to its old form within a year of their departure. The pattern is called absorption without integration. The change is absorbed into the language of the organisation, everyone speaks the new words, but the underlying architecture — the decision structure, the funding, the distribution of powers — has not changed with it. As soon as the carrier falls away, the change falls away with him, for it hung on him and not on the structure. The tax reform that hangs on one officeholder and not on an anchored coalition and an anchored execution is the national version of precisely that pattern.

The countability trap as political discipline

There is one more reason why taxation is so hard to reform, and it also explains why a simpler system disciplines more than the tax alone. Jasper H. van Dijk of the Instituut voor Publieke Economie, a Dutch think tank on public economics, observes that a tax measure can be adjusted quickly and is thus suited to showing that something is happening, while the real solutions — the electricity grid, education, the roads and bridges — are slow and expensive. Taxation is thereby the stage on which politics shows that it acts. Every setback, every public concern can be answered with a new scheme, a credit, an exemption, which is visible and immediate and creates the impression of decisiveness, while the structural investment that would actually address the problem stays invisible until it pays off years from now.

That is the countability trap at the level of politics, and it explains why the system not only fails to shrink but actually grows while everyone promises to simplify it. The symbolic tax measure is the cheap alternative to the real work. And in this lies an argument that connects the design to the transition. A system with few dials, in which taxation is reduced to one visible rate and there is no room for fiscal acrobatics, takes the cheap gesture away from politics. Anyone who can no longer use the tax code to show they are doing something must actually build the grid. The simplicity of a system is in that sense not only a fiscal virtue but a disciplining of politics: it closes off the symbolic escape route and forces a return to the instrument that actually touches the problem. The design with few dials and the transition that drives politics back to the real work are two sides of the same movement.

The proof of the pudding

While this piece was waiting to be published, September supplied two tests of its argument. The first came on Prinsjesdag, Budget Day. In the 2027 Tax Plan the cabinet proposes to abolish the excise discount for small breweries from 2028, because it has been evaluated negatively more than once, together with a series of other schemes: the deduction for specific healthcare costs, the reduced VAT rate for ornamental horticulture, the start-up deduction, the forestry exemption. The minister who tables the proposal is the same man who, as a member of parliament, amended the abolition away in 2021. For the diagnosis that is a gain. For implementation it is the route this piece calls the hardest: a series of small items, each with a constituency of its own, and the brewers and the flower growers made themselves heard at once. Whether the proposal survives its passage through both chambers is the test the first part announced. An exception has been abolished only when the Bulletin of Acts and Decrees says so.

The second test comes from the polder. According to NRC, a committee of the Social and Economic Council (SER), with employers, trade unions, officials from Finance and Social Affairs and the director of the Netherlands Bureau for Economic Policy Analysis, has agreed on the outline of the largest tax reform in decades. The healthcare allowance disappears, child benefit and the child-related budget merge into a single income-independent payment, the healthcare premium falls and the rate for middle and higher incomes rises to 56 per cent. That is the grand exchange as this piece describes it, and once again it is a consensus on the design. The four conditions can be laid against it one by one. The implementer: according to press reports, the draft costs several thousand jobs at the service that now pays out the allowances, and that same service has to carry out the transition. The SER names manageable implementation for the target group and the implementing bodies as an aim; that is the right question, and it has no answer yet. Consent: this time the organised parties sit at the table themselves, which makes the exchange stronger than in 2001, but the plan still has to pass their members. Marike Stellinga observed in NRC that a polder deal only means something if the parties take some of the pain themselves and do not push the bill onto the treasury. The horizon: implementation is foreseen around 2030, after the next election, and so exactly across the boundary of two cabinets. Anchoring: the SER is writing the advice on its own initiative, and nobody in the cabinet has committed to it.

The design is on the table again, better grounded than ever. The question this piece asks thereby becomes concrete: who reserves the compensation, who binds the next cabinet, and who builds up implementation before the first allowance disappears.

What the question really is

For a quarter-century, tax reform has been misdiagnosed as a design question. It is a governance question about the capacity to carry out a reform on which consensus exists, and that capacity fails on two fronts at once, which reinforce each other. It fails on execution, for the service that would have to carry the reform has been so hollowed out by precisely the complexity it is meant to clear away that it cannot cope with it. And it fails on legitimacy in its temporal form, on three points: the system lacks the bought consent, for no compensation has been reserved to overcome the organised losers; it lacks the horizon, for the task spans two cabinets and the political culture no longer delivers two on one line; and it lacks the anchoring, for even a passed law turns out to be reversible before it is implemented, which means the reform hangs on a carrier instead of on a structure. A capable executor, bought consent, a horizon of two cabinets and an anchoring that carries the reform beyond its author: every good design lies waiting for a moment that unites these four, and that moment rarely presents itself.

From this follows the only recommendation this piece makes, and it is one of governance. As long as reform capacity itself is not made an object of design, as long as the anchoring question is put only to the system and not to the reform, every good design will remain a dead letter. Politics already agrees on which reform it wants; the question it must ask itself is which conditions carry a reform beyond the officeholder who begins it: which compensation has been fixed in advance, which coalition has bound itself across two cabinets, and which execution capacity keeps the change standing once attention has moved on. A reform that has no answer to those three questions is an intention, and intentions fill the metres-high pile describing the problem the system already knows and still cannot remedy.

This autumn the beer package goes to every member of parliament again, now with a proposal for abolition on the table. After eighteen years the ministry has put its own diagnosis into a bill; the chamber that voted down the previous attempt in 2021 decides whether the system also turns that knowledge into correction. If the abolition falls again, the system tells the truth about itself: it knows its own diagnosis, it has it in its reports and now even in a bill, and it lacks the conditions under which action holds. The reform that nobody blocks and that still does not come is then the proof that a system unable to turn its own knowledge into correction is dissociated, in its very capacity for reform.

This is Part II of a two-part series. Part I, “The Immortal Exception”, uses the small-brewers scheme — a Dutch tax concession for small breweries — to lay bare the pattern that underlies the failure of reform.

Accountability and sources

This piece takes no position on the content of any tax reform, on rates or on the desirability of specific schemes. It analyses exclusively the governmental capacity to carry out a reform on which consensus exists.

Factual data drawn from: Eline Nugteren, “Waarom grondige belastinghervormingen al een kwarteeuw een dode letter zijn en de schatkist tientallen miljarden misloopt” (“Why thorough tax reforms have been a dead letter for a quarter of a century and the treasury misses out on tens of billions”), NRC, 7 August 2026 (the occasion for this piece), and the sources cited there, including statements by Klaas Knot and Jasper H. van Dijk. Primary sources: coalition agreement 2026–2030 Aan de slag; Ministry of Finance, civil-service report Aanpak fiscale regelingen (30 June 2023) and letter to parliament on negatively assessed tax schemes (23 June 2026); explanatory memorandum to the Income Tax Act 2001 (Parliamentary Papers II 26 727, no. 3); Senate, file 36 748 (Actual Return Box 3 Act); Parlement.com, duration of cabinets. Facts checked against primary sources as of 26 September 2026. Figures on 2001 (five billion guilders in compensation; the cut in the top rate; the earned-income tax credit; outline 1997, implementation 2001) likewise from that source. All facts are paraphrased.

Actualisation, September 2026: Government of the Netherlands, “Belastingplan 2027: voorstellen voor beter werkend belastingstelsel en gezonde overheidsfinanciën” (“2027 Tax Plan: proposals for a better-functioning tax system and sound public finances”), 15 September 2026; Aniek Wiggers, “Afschaffen kleinbrouwerstarief leidt tot ophef in biersector” (“Abolition of the small-brewer rate causes uproar in the beer sector”), NRC, 11 September 2026; SER, work programme “Vereenvoudiging belasting- en toeslagenstelsel” (simplification of the tax and benefits system) and the page of its advisory committee; reporting on the committee’s draft advice (NRC, 21 September 2026, via ANP; the draft itself is not public); Marike Stellinga, “Een polderdeal moet ook over gepensioneerden gaan” (“A polder deal must also be about pensioners”), NRC, 25 September 2026.

Analytical framework: Mark Moore, Creating Public Value (the strategic triangle). The Statecraft concepts anchoring (borging), dissociation, the countability trap (telbaarheidsval) and congealed outcome (gestolde uitkomst) are developed elsewhere in the corpus.

Jacob Huibers is an interim manager with more than twenty years of experience in the Dutch public sector. He has worked as cluster manager, cluster director and kwartiermaker — brought in to stand up new organisations — at municipalities ranging from fifty thousand to over two hundred thousand inhabitants, and at inter-municipal collaborative bodies across the social and physical domains. Statecraft is his platform for strategic reflection on public-sector execution, pillar IV of House of Viridian.

Responses and counter-arguments via Statecraft.nl.