About: 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. 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.