This chapter provides an overview of recent revenue measures as part of broader efforts to restore public finances. A large majority of governments are implementing measures expected to increase revenues in the 2025-2026 fiscal cycle. However, reforms differ significantly in scale and design, reflecting differences in tax structures, institutional capacity, fiscal pressures, and policy priorities. Governments appear to be more short-term-oriented with their tax reforms, while adjustments to longer-term structural changes are progressing more gradually. In the 2025-2026 fiscal cycle, countries have prioritised more targeted measures, including higher excise taxes, particularly on tobacco; strengthened tax compliance and enforcement; and VAT base broadening through the reduction of exemptions and preferential rates.
Restoring Public Finances
Enabling Effective Government
Abstract
A large majority of OECD Member and accession candidate countries are introducing measures that are expected to raise revenues in the 2025-2026 fiscal cycle, but the scale and design of reforms vary. Considering the significant future spending pressures (discussed in Chapter 1 of the report), governments appear to be more short-term-oriented with their tax reforms, while adjustments to longer-term structural changes are progressing more gradually.
Looking ahead, countries face the dual challenge of restoring public finances while ensuring that the tax system remains as competitive, efficient and fair as possible. Policy options include ensuring that tax systems are sufficiently buoyant to allow economic growth to translate into rising revenues; designing agile and resilient tax systems that can adapt to structural changes such as ageing, digitalisation, and new consumption patterns; improving timeliness of reforms, avoiding reliance on short term fixes that undermine long-run coherence; and simplifying tax systems.
Main revenue-raising measures pursued by countries
1. Targeted increases in tax bases and rates
Introducing or increasing sector specific taxes and surtaxes particularly on banks as well as some other highly profitable sectors.
Increasing excise taxes on selected products, especially tobacco taxes.
Applying standard or increased VAT rates to goods and services previously subject to reduced rates or exemptions.
2. Rate hikes of corporate income taxes, personal income taxes, social security contributions, and value added taxes
Raising standard CIT rates or increasing marginal PIT rates for higher-income earners.
Increasing SSCs in response to demographic changes.
Increasing standard VAT rates (although such reforms were more common in 2023 and 2024).
Freezing or only partially adjusting PIT thresholds, deductions, and credits thereby allowing fiscal drag to raise revenues.
3. Strengthening tax compliance and administrative capacity
Introducing or expanding tax administration tools, including e-invoicing, access to data, or enhanced audits (including through AI), and updating anti-avoidance rules.
The level and structure of tax revenues varies across countries and depends on policy choices as well as other country-specific factors such as the economic or institutional context. As with the expenditure measures discussed in previous chapters, most of the reforms analysed in this chapter provide a snapshot of recent policy developments rather than a long-term view of tax reforms over time. In other words, countries that are currently not introducing reforms to raise revenues, may have done so in the past and those that are now introducing revenue-raising measures may be doing so in part because they did not do so previously. Moreover, countries with low tax-to-GDP ratios may have more room to increase revenues. On the other hand, there may be other factors, like the quality of institutions and the level of tax morale, that enable high-tax countries to more easily raise revenues. In addition, the ways in which to raise more revenues, depends, in part, on the existing structure of the tax system (the tax mix), as well as the economic characteristics and challenges of the country. In general, the determinants of the level and structure of taxes are country-specific and beyond the scope of this report. Instead, this section aims to put the following discussion on recent tax policy developments and trends in context and provide the reader with relevant background information on the level and structure of tax revenues in OECD Member and accession candidate countries.
Note: The disaggregated data for Argentina, Australia, Brazil, Greece, Japan, Peru, Poland, Romania, and Thailand were not available for 2024 at the time of publication. For those countries, values for 2023 are shown instead.
Source: Global Revenue Statistics Database as of 1 April 2026. https://www.oecd.org/en/data/datasets/global-revenue-statistics-database.html.
Tax revenues reached 34.1% of GDP on average across OECD countries in 2024. This represents an increase of 0.3 p.p. compared with 2023 and marks the highest average tax-to-GDP ratio recorded for the 38 Member countries (OECD, 2025[1]). The increase in 2024 also represents the first annual rise in the OECD average tax-to-GDP ratio since 2021. As is shown in Figure 14.1 above, Denmark had the highest tax-to-GDP ratio among OECD countries for the second consecutive year in 2024, at 45.2%. France had the second-highest tax-to-GDP ratio in 2024 (43.5%) followed by Austria (43.4%). Mexico had the lowest tax-to-GDP ratio (18.3%).
Over the past decade, tax revenues as a share of GDP have increased in a majority of countries, with the OECD average rising by about 1.1 p.p. Several countries experienced significant increases, including Japan, Mexico, Lithuania and Korea, where tax-to-GDP ratios rose by over 4 p.p. over the last decade (see Figure 14.2 below). However, the trend has not been uniform across countries. While many economies strengthened their tax revenues, a smaller group experienced declines. In terms or recent tax-specific changes, according to the most recent edition of Revenue Statistics, revenues from PIT and SSCs increased as a share of GDP in many countries between 2023 and 2024 (OECD, 2025[1]). These developments are consistent with broader labour market trends, as well as policy measures that raised SSCs in several countries during 2024 and 2023 (OECD, 2025[2]).
Percentage point change in tax-to-GDP ratio between 2013 and 2023
Source: Global Revenue Statistics Database as of 1 April 2026. https://www.oecd.org/en/data/datasets/global-revenue-statistics-database.html.
The composition of tax revenues varies considerably across OECD and accession candidate countries. As shown in Figure 14.3, twenty countries generated the largest share of their revenues from taxes on income and profits (combining PIT and CIT). In contrast, SSCs represented the largest revenue source in ten countries, while taxes on goods and services, including VAT, accounted for the largest share in sixteen countries. Taxes on property and payroll taxes played a relatively limited role in most OECD Member and accession candidate countries. Although overall tax revenues have tended to increase across the OECD over time, the composition of revenues has remained relatively stable.
Note: The disaggregated data for Argentina, Australia, Brazil, Greece, Japan, Peru, Poland, Romania, and Thailand were not available for 2024 at the time of publication. For those countries, values for 2023 are shown instead. OECD countries are grouped and ranked by those where income tax revenues (personal and corporate) form the highest share of total tax revenues, followed by those where social security contributions, or taxes on goods and services, form the highest share. Accession candidate countries can be found at the right side of the figure and are ranked by the share of revenues from taxes on goods and services.
Source: Global Revenue Statistics Database as of 1 April 2026. https://www.oecd.org/en/data/datasets/global-revenue-statistics-database.html.
14.2.1. Overview
The macro-economic conditions discussed in Chapter 1 have led the vast majority of OECD Member and accession candidate countries to introduce measures aimed at increasing tax revenues. In the 2025 - 2026 fiscal cycles alone, almost all countries covered in this chapter are implementing discretionary measures expected to raise revenues. There is, however, significant heterogeneity in both the design and scale of reforms across countries.
The impact of any tax measure on government revenues, and by extension public finances, depends on several factors. These include whether the measure is part of a broader reform package, the behavioural responses of taxpayers to the reform, and the evolution of macroeconomic conditions. As a result, isolating the impact of an individual measure on tax revenues is a difficult exercise, partly because these factors are endogenous to the reform itself. For the purposes of this report, the analysis focuses on the estimated (or perceived) effects of reforms as reported by countries. In other words, a revenue-raising reform in this report is defined as a tax measure that the government expects to increase revenues. Importantly, many countries that have introduced or announced revenue-increasing tax measures have simultaneously adopted reforms that may reduce revenues, at least in the short term. Assessing tax policy developments from a public finance perspective therefore requires considering both the menu of revenue-increasing tax reforms that policymakers can and do choose from, and the broader reform packages of which individual measures are a part of.
While many countries are introducing tax measures to strengthen revenues (see Figure 14.4), fewer have implemented large revenue increasing reforms that involve increases in broad-based statutory CIT, PIT, or VAT rates. Taking a longer perspective, however, reveals a clearer shift in policy priorities over recent years. During the COVID-19 pandemic and the subsequent energy price crisis, many governments were hesitant to raise taxes and instead introduced a range of tax relief measures, including temporary rate reductions and targeted tax expenditures (TEs) aimed at supporting households and businesses (see also chapter 5 and 9). Since 2023, this pattern has begun to change, with several countries introducing larger revenue-raising reforms, including increases in standard tax rates and the gradual withdrawal of crisis-related tax support measures up to the start of 2026.
Across countries, the most common approaches in the 2025-2026 fiscal cycle to increasing revenues have involved indirect tax measures such as tobacco excise tax increases (see Figure 14.4) or phasing out VAT tax expenditures. Another frequently used approach has been the introduction of temporary or permanent excess profit taxes or surtaxes on specific sectors such as the banking or energy sector (see Figure 14.4). Although the revenue impact of these reforms is typically smaller than, for example, an increase in a statutory PIT or standard VAT rate, their increasing use is nevertheless an important trend showing countries are increasingly looking to bolster their public finances through the tax system including by, in some cases, targeting sectors that earn excess profits.
Many countries are also seeking to raise revenues through measures aimed at improving tax compliance. These efforts focus on strengthening tax administration capacity, including through enhanced audit and enforcement activities, expanded digital reporting and e-filing systems, and improved access to taxpayer information. Many tax administrations are also increasingly using new tools including artificial intelligence (AI) to improve risk assessment and enforcement (OECD, 2025[3]). In addition, international co-operation (see 2 and further details below), including the automatic exchange of information, has significantly improved tax authorities’ ability to detect undeclared income and assets held abroad (OECD, 2025[4]). Together, these measures can increase compliance and revenue collection without changes to statutory tax rates.
Measures approved or submitted to parliament for the fiscal years of 2025 and 2026 to increase tax revenues
Note: Results based on 38 RPF Survey responses. Measures reported as “other” in the RPF Survey have been split into the following three sub-categories, based on the qualitative information provided by respondents: “Compliance and anti-fraud measures", “Sector-specific corporate income tax measures" and “Other revenue increase measures”.
Source: 2026 OECD Survey on Restoring Public Finances, Question 15: Increases in Revenue.
Many countries have also supported their public finances by introducing fewer tax cuts than in previous years. In this regard, the year 2023 marked an important turning point away from the broad and generous tax relief measures that were introduced during the pandemic and subsequent period of high inflation (OECD, 2024[5]). When the pandemic triggered the largest global economic crisis in more than a century, countries introduced tax support measures at an unprecedented speed and scale. Initially, many tax measures aimed to alleviate cash-flow constraints for businesses and households. As the situation improved, countries introduced more recovery-oriented stimulus measures, such as CIT incentives for investment and reduced VAT rates for sectors most affected by the crisis (OECD, 2021[6]). During the inflationary period that followed in 2022, governments in many countries introduced temporary reductions in excise duties and VAT on energy products (OECD, 2022[7]). As a result, the shift observed from 2023 onwards reflects, in part, the substantial fiscal costs associated with these support measures, combined with elevated public debt levels and growing spending pressures. These pressures include public expenditure needs related to climate change, population ageing and, in some countries, increased defence spending, as discussed in Chapter 1.
As highlighted in Chapter 1, taxes are the primary fiscal consolidation tool used by countries since the pandemic. The RPF Survey shows that countries are relying on increases in revenue for the main part of their consolidation efforts. On average across the countries which were able to supply estimates, the amount of consolidation due to discretionary measures is modest overall.
The analysis and country examples in the following sections are primarily based on the 2026 OECD Survey on Restoring Public Finances (RPF Survey) and the annual Tax Policy Reforms series (OECD, 2025[2]), which is based on the annual Tax Policy Reforms Questionnaire (see detail in Box 14.1). Analysis of medium- or long-term trends is based almost exclusively on country responses to the Tax Policy Reforms Questionnaire, while the discussion around recent measures introduced or announced in the 2025-2026 fiscal year is based on the answers to question 15 of the RPF Survey.
At the Working Party No.2 on Tax Policy Analysis and Tax Statistics (WP2) meeting in November 2009, delegates from OECD countries agreed to start systematically collecting information on the main tax measures adopted in each country. The motivation for this proposal was to provide consistent and comparative information on tax reforms to inform policy discussions in OECD and non-OECD countries. For each reform, the questionnaire requests information on the type of tax; the dates of entry into force, legislation, or announcement; the direction of the rate and/or base change; and a detailed description of the reform.
Source: OECD (2025[2]), Tax Policy Reforms 2025: OECD and Selected Partner Economies, OECD Publishing, Paris, https://doi.org/10.1787/de648d27-en.
14.2.2. Business taxes
While increases in standard statutory CIT rates have been relatively uncommon in the 2025-2026 fiscal cycles, several countries implemented such reforms in the preceding year. In 2024, five countries – Czechia, Iceland, Lithuania, Slovenia and the Slovak Republic – increased their standard CIT rates to raise additional revenues. The increases were significant: Czechia raised its rate by 2 p.p., while Slovenia temporarily and the Slovak Republic permanently increased their rates by 3 p.p. (OECD, 2025[2]). More recently in 2025/26, only three out of 14 countries indicating CIT measures in Figure 14.4, have increased the standard statutory CIT rate: Estonia and Korea increased their standard CIT rate by 2 p.p. and 1 p.p. respectively. Japan introduced a new 4% surtax1 on CIT liability (equivalent to approximately a 1% increase in the CIT rate) to increase revenues for defence spending. Although these reforms are not widespread, they illustrate that some countries have opted for broad-based rate increases as part of their fiscal consolidation strategies.
A larger number of countries have instead relied on targeted increases in corporate taxation, including additional taxes or surtaxes on specific sectors or profit bases. These typically more targeted measures aim to mobilise revenues by taxing economic rents while avoiding across-the-board increases in the corporate tax burden in order to avoid negative investment effects. In the 2025-2026 fiscal cycles, sector-specific taxes or surtaxes on corporate income were announced, introduced or increased in 9 countries.
These targeted corporate tax measures take different forms, including surtaxes on large corporations and sector-specific levies on highly profitable industries. Poland, for example, in 2026 increased the CIT rate for banks from 19% to 30% (with a planned reduction to 26% in 2027 and then permanently to 23% from 2028 onward). Similarly, Israel announced plans to introduce a 15% surtax on excess profits of large banks, aimed at capturing extraordinary profitability in the financial sector. Belgium and Italy both introduced increases in taxes on the banking as well on the insurance sector. Additionally, France introduced a surtax on large businesses in 2025 and extended it in 2026.
Sectoral CIT increases are part of a broader trend also observed in earlier years. Between 2023 and 2024, several countries implemented similar sectoral measures, including Belgium, Estonia, Hungary, Israel, the Netherlands, Slovenia, the Slovak Republic and Spain (OECD, 2025[2]). And even before that in 2022, a significant number of countries introduced temporary windfall profit taxes and solidarity levies in response to extraordinary corporate profits, particularly in the energy sector, to help finance additional fiscal expenditure and cushion the impacts of price hikes on the most vulnerable groups during the energy price crisis (OECD, 2023[8]). Together, these developments suggest an increasing reliance on targeted corporate taxation measures as governments seek to strengthen revenues while limiting the impact of reforms on the broader business sector.
Recent trends suggest moderation in statutory CIT rate cuts. As is shown in Figure 14.5 below, since 2000, there has been a decline in statutory CIT rates across OECD Member states, however, between 2019 and 2024, statutory CIT rates have stabilised (OECD, 2025[4]). In the 2025-2026 fiscal year only a small number of countries recently reduced or are reducing their standard rate (including, for example, Germany, in which the rate cut will go into effect from 2028 onwards, Portugal, and a proposed reform in Luxembourg). This stabilisation of CIT rates signals that countries are seeking to limit costly tax cuts in an effort to restore public finances and may also reflect the impact of the Base Erosion and Profit Shifting (BEPS) Project (see Box 14.2) or anticipatory effects of the Global Minimum Tax (GMT) (OECD, 2025[4]).
Source: Corporate Tax Statistics Statutory Corporate Income Tax Rates; Figure 2.3 in OECD Corporate Tax Statistics 2025, OECD Publishing, Paris, https://doi.org/10.1787/6a915941-en.
Some measures, though not revenue increasing in the short run, aim to support long-term economic growth and investment, which may strengthen future tax bases. Tax incentives targeting research and development (R&D) expenditures are widespread across OECD Member and accession candidate countries. Over the past two decades, these incentives have generally become more generous as governments have sought to encourage innovation and productivity growth, although recent data suggest that this trend has slowed. For example, Canada has combined capital-focused tax incentives with direct support measures aimed at stimulating investment, innovation and R&D activity. Similarly, Finland has introduced a range of measures designed to remove obstacles to economic growth, including both tax and non-tax reforms intended to strengthen incentives for work and to promote R&D investment. While such policies may reduce revenues in the near term, they form part of broader strategies to enhance productivity and expand economic activity, which can lead to revenue generation over the longer term.
The Base Erosion and Profit Shifting (BEPS) Project was designed to address concerns that the international tax system had not kept pace with the realities of the modern global economy. Concerns over double non-taxation and erosion of corporate income tax bases became more acute following the financial crisis of 2008-2009 and its associated fiscal pressures. In response, in 2015, the package of measures to counter BEPS was published (the BEPS Package), containing 15 BEPS Actions that sought to bring more coherence, substance, transparency and certainty to the international tax system.
The BEPS Project led to an important change to the international tax policymaking landscape with the establishment of the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework). Launched in 2016 following a call from the G20, the Inclusive Framework brings its members – currently more than 145 jurisdictions – together to ensure the comprehensive implementation of the BEPS Package and to establish a level playing field in efforts to update the global tax architecture.
Note: The information in this box is current as of October 2025.
Source: OECD (2025[4]), A Decade of the BEPS Initiative: An Inclusive Framework Stocktake Report to G20 Finance Ministers and Central Bank Governors, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/32096fd3-en.
14.2.3. Labour taxes
There are comparatively fewer efforts to increase revenues through PIT rate changes. One possible explanation is that many governments are seeking to strengthen labour supply and increase labour force participation in the context of demographic pressures, including population ageing and declining working-age populations in several countries. Additionally, as discussed at the start of the chapter, many OECD countries already raise a significant share of their revenues from labour taxes. As a result, policymakers may be cautious about introducing measures that could increase the tax burden on labour and potentially weaken work incentives. Instead, several countries have prioritised reforms aimed at maintaining or strengthening incentives to work, while focusing revenue-raising efforts on other parts of the tax system or on targeting high-income earners. The Slovak Republic, for example, recently increased the progressivity of its PIT system, by lowering the threshold for its second tax bracket and adding two higher brackets with rates of 30% and 35% respectively. The government estimates that its reform will increase revenues by 0.2% of GDP.
A number of countries are making explicit use of not indexing or only partially indexing PIT income brackets, tax credits, and tax deductions to inflation (i.e. fiscal drag by design). In progressive tax systems, not adjusting nominal income brackets in line with inflation can push taxpayers into brackets with higher marginal tax rates, thereby increasing their tax burden and government revenues. This mechanism is often referred to as fiscal drag or “bracket creep.” In fact, an individual’s tax burden may increase even if they do not move into a higher tax bracket, if a greater proportion of their taxable income is taxed at higher rates than if the tax system were fully indexed for inflation. Similarly, if tax credits or deductions are not adjusted to inflation, their real value decreases over time, which can also be seen as a decrease in the real value of a tax expenditure and consequently as having an indirect revenue raising impact. Recently, a number of countries – including Austria, Belgium, Finland, Ireland, and the United Kingdom – have decided not to adjust, or only partially adjust, their thresholds to inflation in an effort to increase revenues. Box 14.4 shows that such policies can have large revenue raising effect over multiple years, as is the case in the United Kingdom.
Most OECD Member countries mitigate the impact of fiscal drag by adjusting the value of the parameters of PIT systems, SSCs and benefits in response to inflation. Indexation can be either automatic or implemented on a discretionary basis. Automatic indexation is generally based on a statutory obligation to adjust tax thresholds, brackets and benefits to reflect changes in a specific indicator at a set point in the tax year. Discretionary indexation implies that the government can choose whether to make such adjustments and can decide upon the size and the timing of any adjustment. Based on data from 2022, under half of OECD countries (17), adjust their PIT system automatically, while for 21 countries the adjustments are discretionary (OECD, 2023[9]). The majority of countries index SSCs and half of OECD countries index benefits.
Source: OECD (2023[9]), Taxing Wages 2023: Indexation of Labour Taxation and Benefits in OECD Countries, OECD Publishing, Paris,
Recent research highlights how fiscal drag can have a significant revenue impact for governments, particularly during periods of elevated inflation. A recent study of 21 European countries found that progressive PIT systems typically display tax-to-base elasticities2 of around 1.7-2, meaning that a 1% increase in nominal income would lead PIT revenues to increase by 1.7-2% in the absence of adjustments (García-Miralles et al., 2026[10]). This shows the significant revenue raising potential of fiscal drag, if countries to do not introduce mitigation measures. However, even when taking mitigation measures and other tax policy changes into account, the study finds that between 2019 and 2023, roughly one-third of countries offset less than 80% of the potential fiscal drag embedded in their tax systems, allowing a significant portion of the potential additional revenue to materialise (García-Miralles et al., 2026[10]). The remainder of the countries either compensated or even over-compensated for fiscal drag. In response to inflation dramatically increasing the cost of living in 2022 and 2023, for example, a number of governments over-adjusted their basic PIT allowances to reduce the tax burden on households (OECD, 2024[5]). Given recent pressures on public finances, the more recent reforms in the 2025 and 2026 fiscal years potentially indicate a shift towards under-compensating. In fact, fiscal drag was also a feature of fiscal consolidation policies adopted in the wake of the Global Financial Crisis (Avram et al., 2013[11]).
In the United Kingdom freezes of PIT thresholds have been a key part of the country’s fiscal consolidation strategy for the majority of the 2020s. Since the Spring 2021 Budget, successive budgets have maintained the nominal values of the personal allowance and higher-rate threshold, while also freezing thresholds for SSCs. The most recent budget extended these freezes until the 2030/31 fiscal year.
Note: The additional government receipts are the total value of all income tax and National Insurance Contributions measures outlined in Table A of the OBR report.
Source: Office for Budget Responsibility (2025[12]), Economic and Fiscal Outlook – November 2025 - CP 1439; Chart B in Box 3.3 on page 72; https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf.
According to the Office for Budget Responsibility (OBR), the continued freeze of allowances and thresholds between the 2022/23 and 2030/31 fiscal years is expected to substantially raise revenues by increasing the number of taxpayers and those facing higher marginal tax rates. As shown in Figure 14.6, by the end of the period, around 5.2 million additional individuals are projected to pay income tax, 4.8 million more taxpayers are expected to move into the higher-rate band, and around 600 000 additional taxpayers are projected to enter the top tax bracket, known as the additional-rate band. The OBR estimates that this freeze of tax allowances and thresholds will increase government receipts by around GBP 67 billion (approximately 1.8% of GDP) over the forecast period, with measures announced in the latest Budget contributing around GBP 13 billion in additional revenue by 2030-2031. This makes these freezes one of the government’s most significant revenue-raising policies.
Source: Office for Budget Responsibility (2025[12]), Economic and Fiscal Outlook – November 2025, https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/.
Finally, rising health expenditures and population ageing are also prompting some governments to introduce measures aimed at increasing revenues from social security contributions (SSCs). The old-age dependency ratio3 has more than doubled in the OECD between 1960 and 2022 (Koutsogeorgopoulou and Morgavi, 2025[13]). As populations age due to increasing life expectancy and declining birth rates, a growing share of the population is retired while the proportion of working-age individuals declines. This shift places pressure on public finances by increasing demand for spending on pensions and health care while at the same time reducing revenues from labour taxes and SSCs in particular. Against this backdrop 13 countries have all reported introducing or planning to introduce SSC revenue-raising measures in recent fiscal cycles (see Figure 14.4).
14.2.4. Taxes on goods and services
For the VAT, revenue-raising efforts in recent years have predominantly focused on broadening the tax base through the reduction or removal of existing tax expenditures. In many cases, governments have chosen to scale back preferential VAT treatments or exemptions that narrow the tax base and reduce revenues. Such measures can generate additional revenues while also improving the neutrality of the VAT system. In addition to base-broadening reforms, a smaller number of countries have also introduced increases in standard VAT rates, with very large projected revenue gains. International co-operation has also strengthened countries’ ability to protect VAT revenues in an increasingly digitalised economy. Through internationally agreed upon standards and recommendations, such as the OECD International VAT/GST Guidelines (OECD, 2017[14]), countries have introduced co-ordinated reforms aimed at the collection of VAT on online sales of services and digital products.
Several countries have recently implemented reforms aimed at removing specific VAT relief measures. For example, Finland abolished the VAT relief scheme for small businesses from 2025, thereby broadening the VAT base. The Netherlands removed the reduced VAT rate for overnight accommodation, increasing the applicable rate from 9% to 21%, a substantial base-broadening measure with significant projected revenue gains from 2026. Similarly, Norway has begun to phase out VAT advantages for electric vehicles (EVs). The VAT exemption threshold for EVs was reduced in 2026, with the full removal of the exemption announced for 2027. This reform was explicitly framed as both a fiscal measure and a correction of price signals in the transition towards a more neutral VAT treatment across vehicle types.
Increasing the standard VAT rate is one of the most powerful tools to raise revenues quickly. While such standard rate increases were less common during the 2025-2026 fiscal year, eight OECD Member and accession candidate countries (Estonia, Finland, Indonesia, Israel, Luxembourg, the Slovak Republic, Switzerland, Türkiye) raised their standard rate in 2023 and 2024. Due to the VAT’s broad base, increasing the standard rate generally raises large amounts of additional tax revenues and can have a significant impact on restoring public finances. Moreover, the rate hikes were significant, with Estonia, and Türkiye increasing the standard rate by 2 p.p. and the Slovak Republic by 3 p.p.
Increasing or introducing health-related excise taxes, and tobacco taxes in particular, is one of the most common measures introduced to raise revenues in the short-term and simultaneously support public health outcomes in the medium and long-term (Figure 14.4). While revenues from health excise taxes on average account for a relatively small share of total tax revenues (2.24% across OECD Member countries as highlighted in Box 14.5), they are increasingly viewed as an efficient and politically feasible tool to raise additional revenues. Countries that have recently increased excise taxes on tobacco include, but are not limited to, Austria, Brazil, Bulgaria, Croatia, Czechia, Estonia, Finland, Ireland, France, Japan, Lativa, Luxembourg, Mexico, Poland, the Slovak Republic, and Sweden. This is in line with a trend identified in the last three additions of the OECD’s Tax Policy Reforms Report, which consistently shows a significant and growing number of countries increasing their health-related excise taxes.
While most reforms relate to excise taxes on cigarettes, countries are also increasing their focus on new and emerging tobacco and nicotine products such as e-cigarettes, heated tobacco products, or nicotine pouches. The take-up of these new products has increased significantly in many OECD Member countries (OECD, 2025[15]). In the absence of policy responses, the proliferation of these products may erode the existing health tax bases and lead to negative health outcomes. Consequently, countries have been broadening their health taxes to include new and emerging products, which in turn has increased revenues. In Austria, for example, nicotine pouches and e-liquids were included in the scope of tobacco taxes in 2026. Similarly, Bulgaria, Japan, Latvia and the Slovak Republic all increased their taxes on emerging products in order to raise revenues and better align excise taxes across products to limit product initiation by young people and avoid price-based substitution across products harmful for health. Within the EU, the new Tobacco Tax Directive provides an opportunity to improve public health while increasing tax revenues. Since 2018 Poland has been taking consistent measures to mitigate the health consequences of the growing popularity of new and emerging tobacco and nicotine products, through the taxation of e- liquids and heated tobacco products, and by expanding the list of products subject to excise tax in 2025 to include nicotine pouches and tobacco product substitutes (tobacco-free products, both with and without nicotine). Additionally, several countries (e.g. Finland, Latvia, and Poland), have also increased their alcohol taxes, citing both revenue and health objectives. Finally, gambling tax increases are another common excise tax measure that allows governments to raise revenues efficiently while minimising harmful distortions. Austria, Latvia, and New Zealand recently increased their taxes on gambling.
Health-related taxes are most commonly implemented through excise duties, which differ from broad-based goods and services taxes in that they apply only to specific products. The excise taxes may be applied to the harmful ingredient itself – such as alcohol content, sugar, salt, or saturated fat – or to the final product that contains it, like a litre of soft drink, an alcoholic beverage, or a pack of cigarettes (OECD, 2024[16]). In 27 of the 38 OECD countries, revenues from excise taxes on tobacco were the principal source of health tax revenues (OECD, 2024[17]). On average across OECD countries, the health excise taxes on tobacco, alcohol and sugar-sweetened beverages (SSBs) equated to 0.74% of GDP and generated 2.24% of total tax revenues in 2022.
Source: OECD (2024[17]), Revenue Statistics 2024: Health Taxes in OECD Countries, OECD Publishing, Paris, https://doi.org/10.1787/c87a3da5-en.
As the fleet share of electric and other alternative fuel vehicles increases, traditional fuel tax bases are eroding and there are emerging signs of a shift from energy-based taxation toward distance-based road-use taxes as a more stable long term revenue source. As EV adoption rises, the revenues from transport-related taxes that in the past often exempted or favourably treated EVs, has come under pressure. In response, several countries have introduced reforms to vehicle or road-use taxation. For example, Finland increased motor vehicle taxes on EVs and plug-in hybrid vehicles as part of a broader effort to rebalance incentives within the transport tax system. Iceland broadened its kilometre-based road-use fee to all cars, alongside a gradual shift away from fuel duties. Both reforms were explicitly framed as measures to ensure the long-term fiscal sustainability of transport taxation. In addition, some countries are adjusting the VAT treatment of EVs as part of a gradual phase-out of generous tax incentives. In Norway, the VAT exemption threshold for new EVs was further reduced to NOK 300 000 in the 2026 budget, with the full removal of the exemption announced for 2027.
Several countries have strengthened carbon pricing instruments. Germany increased its national carbon price from EUR 45 per tonne to EUR 55 per tonne in 2025, applying to emissions from heating fuels and transport fuels. Luxembourg raised its CO₂ tax by EUR 5 per tonne as of 1 January 2026, also applying to emissions from heating fuels and transport fuels. Norway announced a higher trajectory for climate-related taxes.
14.2.5. Property taxes
Property taxation remains an important instrument for raising revenue relatively efficiently. In OECD countries, property taxes generally take four main forms: recurrent taxes on immovable property, taxes on financial and capital transactions, taxes on net wealth, and taxes on gifts and inheritances. Recurrent taxes on immovable property, in particular, are often seen as progressive and efficient, as they tend to fall on wealth rather than income and are associated with comparatively low economic distortions (Johansson et al., 2008[18]). Recent tax reform trends, however, suggest that countries are not widely introducing new property tax measures to raise revenues.
Only a small number of countries have introduced or announced revenue-increasing property tax measures in the recent fiscal years. Examples include Austria, which introduced stricter rules for indirect real estate transfers through company shares (also referred to as share deals), thereby eliminating loopholes and broadening the tax base. In addition, a new rezoning surcharge raised the tax burden on capital gains from land that was re-zoned and then increased in value. Other countries introduced targeted measures focusing on underutilised property. In Israel, for example, a vacant land tax is in the process of being legislated and Ireland also reformed its “Derelict Property Tax”. Lithuania introduced a comprehensive property tax reform, implementing a progressive tax structure based on property value and whether the property is a second home or vacant.
14.2.6. Tax administration measures aimed at raising revenues through compliance
In addition to changes in tax policy, countries are also seeking to strengthen revenues by improving tax compliance through improving government operations in tax administration. These efforts typically focus on strengthening enforcement capacity using new technologies and improving the access to taxpayer information, but also further expanding e-filing and improving taxpayer services and education programmes. Such measures can increase revenues by reducing tax evasion.
Many tax administrations are adopting AI tools to improve efficiency, strengthen compliance and reduce administrative burdens. Enhancing the use of such technologies can make tax administration operations more efficient, lowering costs, while also supporting better enforcement, which in turn, can contribute to higher compliance and increase revenues. Furthermore, there has been a shift towards more taxpayer-centric thinking in the governance of tax administrations (OECD, 2025[19]). Tax processes are increasingly integrated within taxpayers’ core activities and businesses operating systems (e.g. automation of taxation processes within the payroll software used by employers in the pay-as-you-earn systems) (OECD, 2025[19]). By integrating tax processes into business and financial systems, such approaches can make compliance more seamless while also improving the accuracy and timeliness of tax reporting.
Several countries have increased funding or staffing for their revenue authorities to expand audit and enforcement activities. For example, Australia has extended and expanded compliance activities under the “Strengthening Tax Integrity” initiative. Similarly, Ireland and New Zealand have increased funding for their tax administrations to support additional compliance programmes. Estonia increased staffing at the Tax and Customs Board to strengthen the collection of PIT and VAT.
Some countries are also introducing or enhancing anti-evasion and anti-avoidance measures. Chile introduced a comprehensive Tax Compliance Law in 2024 aimed at strengthening enforcement and reducing evasion (see Box 14.6). In Israel, compliance measures include restrictions on the use of cash and additional actions to address the shadow economy. Poland has established an interministerial team to co-ordinate actions against the shadow economy across government agencies and in 2026 introduced the mandatory National e-Invoicing System - KSeF (Krajowy System e-Faktur) for the issuing, receiving, storing and viewing of electronic invoices in a structured format. Thailand removed its low-value import exemptions to close loopholes in the context of growing e-commerce activity. Additionally, efforts to strengthen international tax transparency over the past decade is increasingly enabling countries to enforce anti-evasion measures to protect the PIT base. The implementation of common reporting standard for the automatic exchange of financial account information (CRS‑AEOI standard), for example, has given tax authorities information about the foreign earned income of the individuals that are tax-residents in their country, making it far more difficult for tax evaders to hide assets and income abroad.
In October 2024, Chile enacted one of its most comprehensive tax compliance reforms. The reform package introduced a wide range of administrative measures aimed at curbing tax evasion and avoidance, enhancing transparency, and reducing informality. Key measures included:
Strengthening the General Anti-Avoidance Rule (GAAR) by codifying definitions related to tax avoidance, establishing a committee to assess its application and raising the threshold for when the GAAR can be applied.
Reforming penalty rules, including a new calculation method for penalties for late payments and higher penalties for various tax offences and infractions.
Expediting the administration's access to bank account information if prior judicial authorisation is obtained.
Introducing the concept of whistleblowers in the legislation.
Stricter rules on cash transactions, requiring identification of the payer for transactions above a specified threshold.
New obligations on business groups, including the designation of an agent responsible for co-ordination with the tax authority.
Aligning with international standards on transfer pricing and controlled foreign corporation (CFC) rules.
Modifying the criteria for designating a foreign jurisdiction as a preferential tax regime.
Clarifying beneficial ownership under Chile’s indirect transfer tax rules, particularly in relation to capital gains realised through tax haven jurisdictions.
Implementing a new VAT regime for low-value imports.
Amending the luxury goods tax introduced in 2023 to clarify definitions (e.g. for yachts).
Strengthening valuation rules across tax categories by permitting adjustments where declared values deviate significantly from market values.
Broadening the VAT base by enabling the tax administration to assess VAT on fixed asset transfers occurring as part of corporate reorganisations, when the primary motive of such reorganisations is to avoid VAT liability.
Introducing a temporary asset regularisation scheme, allowing taxpayers to declare previously undeclared foreign assets. The regime is limited to assets not held in high-risk or non-cooperative jurisdictions and excludes taxpayers under audit or criminal proceedings.
Source: OECD (2025[2]), Tax Policy Reforms 2025: OECD and Selected Partner Economies, OECD Publishing, Paris, https://doi.org/10.1787/de648d27-en.
Taken together, these reforms and trends highlight the importance of tax administration as a tool for revenue mobilisation. As digital technologies continue to evolve and economic activity becomes increasingly integrated across digital systems, improvements in tax administration capacity and digital infrastructure are likely to play an increasingly important role in strengthening compliance, reducing tax gaps and supporting sustainable public finances.
14.2.7. Other non-tax measures increasing revenues
Although government revenues are predominantly raised through taxes in non-resource rich countries, there are also non-tax sources of revenues. Non-tax revenues refer to increases in government net worth arising from transactions other than taxes. They mainly include property income (such as interest, dividends, rents and royalties), sales of goods and services, or fines and penalties. A limited number of countries (including Austria, Belgium, Chile, Latvia, and New Zealand) have reported that they recently increased certain administrative fees or penalties, thereby increasing non-tax revenues. In terms of selling assets, examples include Portugal’s re-privatisation of the national airline, which is currently underway, or the sale of defence-related assets by the Slovak Republic.
Looking ahead, the challenge for policymakers is often to raise revenues in ways that doesn’t harm growth. As long as growth at least proportionally translates into additional tax revenue, economic growth can be a key contributor to raising revenues and fiscal consolidation. Forward-looking policy should therefore seek to both raise revenues through tax reforms when needed and ensure that the tax system sustains economic growth that translates into more revenues and stronger public finances. This includes ensuring that tax incentives are well targeted and cost effective and continuing international efforts to protect tax bases such as the OECD/G20 BEPS Project.
Another important consideration is the agility and resilience of tax systems in the face of structural and economic change. Governments increasingly need tax systems that can adapt to long-term trends such as population ageing, digitalisation, automation and evolving consumption patterns, as well as to unexpected shocks including global health crises, energy price crises, or disruptions to supply chains. Recent experience illustrates the importance of such flexibility. During the COVID-19 pandemic and the subsequent energy price crisis, many countries with sufficient fiscal space were able to rapidly introduce tax support measures. However, as economic conditions improved, the gradual withdrawal of some of these measures proved more difficult. Additionally, anticipating trends can help policymakers design reforms that are more responsive to future challenges. For example, the rapid growth of new and emerging tobacco and nicotine products (such as e-cigarettes or nicotine pouches) requires efforts to monitor the market as well as frequent adjustments to excise tax rules. Another example is that if reduced VAT rates are applied to the goods and services that are consumed more by the elderly, population ageing will over time erode VAT revenues due to shifting consumption habits. Lastly, yet another example is the energy transition in the transport sector, where declining fuel consumption may require countries to introduce distance-based road use charges as a way to maintain a stable and sustainable revenue base (van Dender, 2019[20]). Analysing these trends and their impact on the tax system, can allow for pre-emptive reforms.
Furthermore, structural trends such as population ageing and wealth concentration at the top of the distribution, can create opportunities for some countries to explore new tax bases. Inheritances, for example, are expected to increase in number, with the baby-boom generation getting older, and in value, if trends in asset prices continue. In addition, wealth is expected to remain concentrated among older cohorts for longer periods of time. In this context, a 2021 OECD report found that inheritance taxation could play an important role in raising revenues, addressing inequalities, and improving efficiency in the future (OECD, 2021[21]). Additionally, due to the movability of capital, some countries have introduced exit taxes to ensure individuals do not migrate for the purposes of tax planning (Hourani and Perret, 2025[22]).
Timeliness of reform is also an important element of fiscal policy. In some countries, short-term revenue increases may be necessary to regain the capacity for strategic agility and fiscal choice. Delaying necessary reforms can increase the eventual adjustment required and reduce governments’ capacity to act when new challenges arise. Similarly, relying too heavily on short term fixes that undermine the efficiency and equity in the long run, also risks requiring costlier comprehensive reforms in the future. Indeed, the responses from the RPF Survey analysed in this chapter suggest that tax reforms in many OECD Member and accession candidate countries appear to more reactive and short-term-oriented, while adjustments to longer-term structural changes tend to progress more gradually so far.
Finally, well-designed reforms aiming to simplify taxes may cut costs and raise revenue. Simplifying taxes can support business growth by lowering compliance costs while at the same time lowering enforcement costs for the tax administration. Doing so requires evaluating the combined effect of taxes and benefits. The outcome of such evaluations may show that complexity results in unintended consequences and better outcomes could be reached through a streamlined and simpler tax and benefit design.
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← 1. The Japanese surtax of 4% went into force in April 2026 and included a JPY 5 million deduction to accommodate small- and medium-sized enterprises (SMEs).
← 2. Tax‑to‑base elasticities measure how much PIT revenues would change when taxable incomes rise, assuming that the tax rules (including the rates and thresholds) remain the same. For example, an elasticity of 2 means that if all taxpayers’ nominal incomes increased by 1%, PIT revenues would rise by roughly 2% (all else equal).
← 3. The old-age dependency ratio is defined as the number of people aged 65 and over per 100 individuals of working age (20-64).