Q. Which of the following statements correctly describes the term ‘High tax buoyancy’?

[A] High tax collection without changing the tax rate

[B] low tax collection on the unchanged tax rates

[C] No change in the collection despite the high tax rate

[D] change in the tax rate does not affect collection in any way.

Answer: A
Notes:

Tax buoyancy refers to the responsiveness of tax revenue growth to changes in GDP. When a tax is buoyant, its revenue increases without increasing the tax rate.

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