Question

Q7) An increase in tax revenues collected by the government due to the growth in the national income is known as

• A. a) Tax elasticity
• B. b) Tax spread
• C. c) Tax buoyancy
• D. d) Progressive Taxation

Answer 1

The correct option is C

c) Tax buoyancy

Ans: C

Explanation: 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 thetax revenues increase more than proportionately in response to a rise in national income or output.