Poland is the latest country to adopt a flat tax in place of complex tax bands and exemptions. Ambrose Evans-Pritchard reports in the Telegraph that:

Poland is to join the flat-tax revolution sweeping Eastern Europe, switching to a single band of 18pc on income tax, corporation tax, and VAT. Mirosaw Gronicki, the Polish finance minister, said the one-tax-fits-all system would sweep away the country's complex grid of rates and exemptions by 2008.

The Polish centre-left government calculates that the switch from its current top rate of 40% will create sufficient extra growth and compliance to compensate for any immediate revenue shortfall.

Predictably the EU’s traditionalists have objected. Sweden’s Goran Persson and Nicholas Sarkozy, France’s ex-finance minister, have claimed that the EU's big net contributors "are effectively subsidizing the low tax rates of competitors." This is not in fact true, since a flat tax brings in more revenue, not less, in consequence of extra growth and compliance. Slovakia is the most recent country to benefit from this.

In the UK, Chancellor Gordon Brown introduces his annual budget today. Since 1997 he has introduced new tax bands, plus a host of new taxes, and introduced such fearsome complexity that even tax accountants find difficulty in penetrating its arcane rules. Brown himself has invested too much in a tax system understood only by Treasury officials, but his successor will be forced to look very closely at the new system sweeping across Europe.

The ASI will urge the next Chancellor, who may be only 7 weeks away from office, to set up a Treasury working party to study how a flat tax might be introduced in the UK, and how it would affect revenues. It will be difficult for the UK to resist its advantages indefinitely, knowing the huge benefits which will accrue to the major EU economies which step first down that road.

Poland’s decision is another mile-marker pointing the way forward.