The International Monetary Fund has said more than half of the additional revenue governments expect from tax policy measures often fail to materialise due to unrealistic projections, weak implementation and inadequate tax administration.
The IMF disclosed this in a study titled Understanding Over-Optimism in Tax Revenue-to-GDP Forecasts under IMF-supported Programs, which examined tax revenue forecasts under IMF-supported programmes between 2015 and 2024.
The study, authored by Jean-Marc Atsebi, Qiaoe Chen, Nikolay Gueorguiev and Magali Pinat, found a significant gap between projected and actual revenue gains.
According to the researchers, governments under the programmes projected a median increase of one percentage point in the tax revenue-to-gross domestic product ratio by the third year. However, the actual median increase was only 0.3 percentage point.
The IMF attributed the shortfall to overestimated revenue yields from tax policy measures, unrealistic assumptions about tax buoyancy, errors in economic forecasts and expectations that governments would fully implement planned reforms.
Tax policy yield estimates determine how much additional revenue governments expect from new taxes or changes to existing tax rules. However, the study found that more than half of the projected gains from such measures often failed to materialise.
The researchers said the ability of governments to implement tax measures effectively was critical to achieving revenue targets.
They noted that well-designed tax policies, full implementation and deeper structural reforms could improve the chances of meeting revenue projections.
The IMF said, “When revenue measures are well-designed, fully implemented, and accompanied by high-depth revenue-related structural reforms, projected revenue gains materialize to a large extent.”
The study also identified tax administration capacity as a major factor in revenue collection, noting that weak institutions could prevent governments from translating policy changes into actual revenue.
The findings come as Nigeria implements a new tax framework introduced through four major laws that took effect in January 2026.
The laws are the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.
