KDI School of Public Policy and Management, in collaboration with the World Bank, held the July 2026 edition of its Monthly Webinar Series on Wednesday, July 15, examining how countries can achieve significant and sustained increases in tax revenue.

The session, titled “Tax Accelerations: Drivers, Impact, and Sustainability,” featured Franz Ulrich Ruch, Senior Economist with the World Bank’s Prospects Group. He presented findings identifying the conditions under which countries increase their tax-to-GDP ratios, the reforms that drive such improvements and the factors that determine whether the gains endure.

Connecting academic research with practical policy challenges, the webinar reflected KDI School’s broader commitment to preparing students and public-sector professionals to design evidence-based solutions for sustainable economic development.

Ruch described a “tax acceleration” as a significant and sustained increase in tax revenue relative to the size of an economy. The research employed different statistical approaches to distinguish lasting revenue improvements from temporary increases caused by economic fluctuations, commodity prices or one-off tax payments. Under the principal method, an acceleration must last at least five years and produce a meaningful increase in the tax-to-GDP ratio.

The study identified 211 tax-acceleration episodes, comprising 70 in high-income countries, 119 in middle-income countries and 22 in low-income countries. Although the number and duration of episodes varied depending on the statistical method applied, the different approaches produced broadly similar conclusions. On average, tax accelerations lasted approximately eight years and increased revenue by about 4.8 to 5 percentage points of GDP, equivalent to around 0.6 percentage points annually. Both direct and indirect taxes contributed to the increases, including personal income tax, corporate income tax and taxes on goods and services.

Ruch’s session showed that sustainable revenue mobilisation is influenced by the structure of an economy. Previous studies have generally found that a large agricultural sector is associated with lower central government revenue because agricultural activities are frequently informal, geographically dispersed and more difficult to tax. Higher income per person and greater trade openness, by contrast, tend to be associated with stronger revenue collection. The literature reviewed during the webinar suggests that high inequality can weaken revenue mobilisation, while greater investment in education can strengthen it. Lower corruption is similarly associated with higher tax revenue because taxpayers are more likely to comply when they trust public institutions and believe that taxes are being collected and used fairly.

The findings also indicated that tax accelerations frequently coincide with broader structural transformation. During acceleration periods, the share of agriculture in economic output declined more rapidly, while trade as a share of GDP increased. However, Ruch emphasized the importance of n treating these relationships carefully, noting that such changes may occur alongside tax improvements without necessarily proving that one directly causes the other.

7The research found that improvements in tax productivity, rather than tax-rate increases alone, were a major predictor of tax accelerations. Tax productivity refers broadly to the amount of revenue collected from an existing tax rate and base. It can improve when more taxpayers are registered, exemptions are reduced, underreporting is detected and collection systems become more efficient. During tax-acceleration periods, the productivity of value-added tax, corporate income tax and personal income tax increased significantly. These findings suggest that governments may mobilise considerable additional revenue by improving the performance of existing taxes rather than relying mainly on higher statutory rates.

Mexico was presented as an example of a long-running tax acceleration. Between 2006 and 2023, its tax revenue increased from 8.8 percent to 14.3 percent of GDP as the country implemented reforms intended to reduce its dependence on oil revenue. Mexico’s 2014 reforms broadened the tax base, reduced exemptions and preferential regimes, strengthened the progressivity of personal income tax and expanded electronic invoicing and digital audits. Later administrative measures included stronger penalties for tax fraud, restrictions on tax amnesties, anti-avoidance rules, transfer-pricing enforcement and the taxation of digital platforms.

Thailand provided a contrasting example. Between 2000 and 2013, the country increased tax revenue from 14.6 percent to 19.2 percent of GDP while modernising its tax administration. Reforms included an electronic revenue system, online registration, electronic filing, improved VAT-refund controls, optical character-recognition technology and a stronger transfer-pricing framework.

At the same time, Thailand reduced its corporate income tax rate from 30 percent to 23 percent and subsequently to 20 percent in 2013. The rate reductions partly offset the revenue gains generated by improvements in administration and productivity. Thailand later experienced a setback, showing that an acceleration can weaken when policy changes, economic conditions or administrative pressures reduce previously achieved gains.

Despite such risks, the broader study found that tax accelerations were generally durable. Setbacks occurred in approximately 24 percent of episodes, but even countries experiencing reversals retained substantial revenue gains. On average, about 95 percent of the tax level achieved during an acceleration was still maintained five years later. 

The study, therefore, recommends prioritising administrative efficiency, broadening and simplifying tax bases, integrating tax and customs data and expanding electronic filing, payment and invoicing systems. These tools can reduce compliance costs, support risk-based audits and help governments identify economic activity that previously remained outside the tax system.