On 17 March 2023 the IMF published a working paper with the title: A Deep Dive into Tax Buoyancy: Comparing Estimation Techniques in a Large Heterogeneous Panel, by A. Cornevin, J. S. Corrales and J.P. Angel. The paper looks at new evidence relating to tax buoyancy in 185 countries during the period from 1990 to 2020. Tax buoyancy is a measure of the responsiveness of tax revenues to changes in economic activity.

By comparing short-term and long-term buoyancy coefficients for total tax revenues over a range of different individual taxes the authors found that long-term tax buoyancy was estimated to be approximately 1, showing a consistent buoyancy in the long term across the range of tax components and country income levels. In the short term, the estimates of tax buoyancy were consistently below 1 when looking at the aggregated tax revenue, but the results varied depending on the particular components of the tax system being studied. The short-term buoyancy was generally higher in advanced economies than in emerging markets or low-income countries, but there were significant differences within these groups of countries.

The paper notes that when the figures were tested for possible changes in in tax rates, tax base reforms, and tax exemptions there was no significant change in the buoyancy estimates. The authors conclude that this suggests that tax policy is generally acyclical and there could be more scope for governments to improve the power of tax systems to promote stability in the economy, by increasing short-term tax buoyancy. Governments could therefore use pro-cyclical policy changes to better align tax revenues with the business cycle.