Question

The term "tax buoyancy" refers to:

• A. The ability of the government to collect taxes efficiently.
• B. The responsiveness of tax revenue growth to nominal GDP growth.
• C. The impact of tax changes on the overall economy.
• D. The ratio of tax revenue to government expenditure.

Answer 1

Answer:

B. The responsiveness of tax revenue growth to nominal GDP growth.

• Tax buoyancy is a measure of how well a country's tax revenues respond to changes in national income.

• A buoyancy of more than one indicates that tax revenue is growing faster than the economy.