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.
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.
- ^“Growth of Income Tax Revenue in India” (PDF). Retrieved 19 November 2012.
- ^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.