Buoyancy and Elasticity of Tax Revenue: Measurement Techniques

Mr. S. M. Jawed Akhtar

doi:https://doi.org/10.17492/vision.v1i2.2426

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Buoyancy and Elasticity of Tax Revenue: Measurement Techniques

S. M. Jawed Akhtar

https://doi.org/10.17492/vision.v1i2.2426

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Published Online: December 21, 2014

Author Details ( * ) denotes Corresponding author

1. * S. M. Jawed Akhtar, Associate Professor, Department of Economics, Aligarh Muslim University, Aligarh, Uttar Pradesh, India (drsmjawed@gmail.com)

High degree of responsiveness of tax yield to changes in national income is a desirable characteristic of any tax system. If a government depends on tax revenue to finance a large part of its expenditure then it is necessary to ensure that an increasing proportion of national income flows into the public treasury as taxes. In other words, the requirement is to increase the incremental tax ratio. Computation of tax buoyancy and elasticity becomes relevant in this context. This paper explains the concepts of buoyancy and elasticity of tax revenue and describes the various methods to compute them.

Keywords

Buoyancy, Elasticity, Tax yield

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