Rachel Reeves could stop giving money away if she wants to close the UK’s looming spending gap. And baby boomers could be her first target.

At the moment the chancellor gives away more than £50bn in tax relief for pension saving, most of which goes to wealthier boomers and better-paid gen Xers who do not need the money and would save anyway if state support was more limited.

A remodelling of pension subsidies – cutting the 40p higher rate to a flat rate of 25p for all savers – could claw back £10bn to £20bn in extra income tax and national insurance payments, depending on how the new regime is constructed.

In a separate but related move, Reeves could reduce or scrap the tax-free allowance, a privilege that allows for a quarter of retirement savings to be taken as a tax-free lump sum.

Boomers have been exercising their “right” to tax-free cash for decades at everyone else’s expense. While some savers need the money to pay off debts or help with the cost of living, it has always been unclear why this indiscriminate benefit should be gifted to those who, by definition, have more money than most by virtue of having a pension.

Fears that pension reform is imminent have already triggered a rush of older savers keen to exit with the biggest bag of tax-free cash they can muster.

According to a freedom of information request by the wealth manager Evelyn Partners, figures from the Financial Conduct Authority show that individuals withdrew £18.1bn from their pension pots in the year to the end of March, up from £11.25bn in the previous year.

The figures showed that most of the money taken out was in the second half of the tax year, after it became clear that Labour would need to raise more cash to keep the public finances in balance over the rest of the parliament.

Such is the yawning gap in the public finances that Reeves, one of the few senior ministers to remain in the same post in Friday’s post-Angela Rayner reshuffle, needs to consider big, bold reforms to taxes that are outmoded and unfair. But what kind of reforms and how to do it? On the question of wealth and how to go about taxing it, the Treasury is sailing on an open sea without the navigational instruments needed to give a sense of direction.

One of the main problems is the total lack of agreement among the UK’s main thinktanks, academics and the population at large about which taxes are most in need of being reworked.

There was a time when the government of the day would sponsor a royal commission to consider the best way forward. But these days ministers are always in too much of a hurry. Or consider that a commission will choose remedies they find awkward, placing them in a politically difficult position.

The Mirrlees Review of 2010-11 attempted to clean up a complex tax system and eliminate many of the most egregious tax breaks. There is little sign of a follow-up.

In addition to pensions, ministers could overhaul council tax, which has a special place in the pantheon of bad taxes. The arguments for a change are many when the annual payments are based on property values from a previous century and the limited number of bands mean that the most expensive homes pay little more than the cheapest.

Oxford University’s John Muellbauer suggests the government switch to a tax based on a percentage of a property’s value. A veteran housing expert, the Nuffield College professor would abolish the top two tax bands – G and H – and instead levy a charge of 0.5% of the property’s value. For the first time the tax on a £10m home would not be £3,000 to £4,000 a year, but more like £50,000.

This shift would involve valuing about 1.1m homes in the G and H bands, which is much easier than valuing all 29m homes, which many economists and thinktanks advocate as part of a complete overhaul.

Muellbauer calculates that the new property tax levy could raise up to £10bn for Reeves, who under his plan would cream off the excess generated by the shift, leaving councils no worse off. Older boomers who refuse to downsize could defer their payments with a small surcharge. Over time, band by band, the whole council tax system could be modernised.

This proposal satisfies the most immediate need for money to fill Reeves’s budget shortfall while putting in place a system that can be expanded over time.

Muellbauer lacks public backers, despite presenting his work inside Whitehall and to various thinktanks. And yet without the kind of support that gives such proposals momentum, the Treasury can be expected to dither.

There are rival proposals aimed at the main wealth taxes already on the statute book – council tax, capital gains tax and stamp duty on property purchases – but they all call for a more comprehensive overhaul, one that will be politically more difficult for Reeves to pursue.

Given the need for No 10 and the Treasury to agree a plan ahead of the autumn budget, thinktank rivalry and academic competition could be the boomers’ saviour. Pension changes and Muellbauer’s plan deserve support, yet without a coalition behind them, ministers will probably want to stick with their standard mode of operation: muddling through.