Taxation on a human scale

This doctrine has already given rise to a great deal of intellectual gymnastics. Consider a taxpayer who, due to unfortunate circumstances, has accrued a tax liability which he or she obviously cannot pay off in a lifetime. You would think that, in such a case, there would be ways to cancel the tax liability, with the noble aim of granting the taxpayer a minimum of dignity in his or her existence. This is not possible, however. Everyone has to pay their taxes. The legal concept of the unlimited deferral of the tax liability payment has nonetheless been created to meet the needs of society. Briefly summarised, this involves legal acrobatics. If necessary, and as long as his or her financial situation does not improve, the taxpayer can make small, affordable payments towards the liability for the rest of his or her life. Cancelling the debt is not an option, however.

If offering the taxpayer better protection means that a legal doctrine should be reviewed, then so be it.

This shows how legal practice struggles with the public policy doctrine. No lawyer will think that it can be done differently, since the public policy doctrine is taught as something indisputable in tax law. Yet, it is not. In the present times, especially, this requires in-depth consideration. We have entered a social order where the collective prevails over the individual. The rights of individuals are under increasing pressure. Also, and perhaps especially at a fiscal level, since the government needs to keep getting revenue when economic conditions are less favourable.

Once we have reclaimed our freedom, a lot more tax money will have to be found. The tax authorities are already being imposed financial targets. Things won't be any different in the future. Taxpayers may become just a line in an Excel sheet that should yield a minimum return. When that happens, we could end up in a fiscal variant of Milgram's experiment. In that experiment, participants had to give each other electric shocks, which demonstrated that the boundaries between personal conscience and inflicting pain were quickly crossed.

There must be additional checks and balances in such circumstances. In the case of tax law, whose public policy character allows for practical implementation, this may come in the form of a hardship clause. Under this clause, the court may decide not to apply the provision of the law, in whole or in part, should such application lead to exceptionally unfair or unreasonable consequences.

The Netherlands will introduce a hardship clause for all tax provisions in order to better protect the taxpayer. Here in Belgium, this seems just as sensible as it is appropriate. If this means that the public policy doctrine in taxation should be reviewed, then so be it. All good – and bad – things must come to an end.