Governments can increase revenue growth without raising tax rates by reducing distortions in tax-system design, the International Monetary Fund said. Its Fiscal Monitor research found that value-added taxes (VAT), a tax collected through production and sales stages, can become a production tax when businesses cannot fully credit input taxes. Poorly designed employment taxes can also discourage workforce participation. Typical corporate income taxes raise the cost of capital by 15% to 20% across country groups, partly because investment costs are not fully recovered for tax purposes. Restoring VAT neutrality could generate welfare gains of up to 0.8% of GDP, averaging 0.26%. Corporate tax systems that immediately deduct investment costs while taxing economic rents could lift long-term capital stock by 6.4% in advanced economies and 8.2% in low-income developing economies, raising GDP output by 2.1% to 2.7%. Stronger tax administration could also increase revenue by narrowing compliance gaps: countries at the 67th percentile of tax-administration strength collect 1.7 percentage points more revenue as a share of GDP than those at the 33rd percentile.