The International Monetary Fund (IMF) has warned that governments often fall short of tax revenue targets because they overestimate how much new tax measures will yield and fail to implement planned reforms fully.

A study by four IMF researchers found that tax revenue projections under IMF-supported programmes between 2015 and 2024 targeted a median increase of one percentage point in tax revenue as a share of gross domestic product (GDP) by the third year. However, the actual median increase was only 0.3 percentage points.

The study, titled ‘Understanding Over-Optimism in Tax Revenue-to-GDP Forecasts under IMF-supported Programmes,’ attributed the gap to inflated estimates of revenue from tax measures, unrealistic assumptions about how collections would respond to economic growth, errors in economic forecasts and weak implementation of planned policies.

“A key finding is that over-optimism in tax policy yield estimation, policy implementation expectations, and tax buoyancy assumptions plays a central role in explaining these forecast errors, alongside macroeconomic forecast errors and a residual optimism,” the IMF said.

The researchers found that more than half of the additional revenue governments expected from tax policy measures often failed to materialise, raising questions about the reliability of revenue projections that are not backed by effective implementation.

They stressed that introducing new taxes or increasing existing rates would not necessarily deliver the expected income without strong tax administration and deeper structural reforms.

“When revenue measures are well-designed, fully implemented, and accompanied by high-depth revenue-related structural reforms, projected revenue gains materialise to a large extent,” the IMF said.

The findings are relevant to Nigeria, which introduced four major tax reform laws in January 2026 to harmonise tax administration, eliminate duplicate taxes, improve compliance, broaden the tax base and ease the burden on small businesses.

However, businesses have continued to raise concerns about multiple taxes, levies and other government collections, highlighting questions about reforms implementation across different levels of government.

The IMF study suggests that the success of Nigeria’s reforms will depend not only on the policies introduced but also on the capacity of tax authorities to enforce them and ensure that expected revenue gains translate into actual collections.

The researchers called for further studies into how political conditions, including elections and instability, affect tax revenue, as well as the effects of tax evasion and compliance on revenue forecasts.