Tax buoyancy

Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue mobilization in response to growth in the Gross domestic product or National income.[1]

A tax is said to be buoyant if the tax revenues increase more than proportionately in response to a rise in national income or output.

A tax is buoyant when revenues increase by more than, say, 1 per cent for a 1 per cent increase in GDP.

Usually, tax elasticity is considered a better indicator to measure tax responsiveness.[2]

References

  1. ^“Growth of Income Tax Revenue in India” (PDF). Retrieved 19 November 2012.
  2. ^Jane H. Leuthold and Tchetche N’Guessan. “Tax buoyancy” (PDF). Tax buoyancy vs. elasticity in a developing economy. University of Illinois at Urbana-champaign. Retrieved 19 November 2012.

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