Explanation : Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases In income and discretionary changes (i.e. tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system. Therefore, tax buoyancy is a measure of both the soundness of the tax bases and the effectiveness of tax changes in terms of revenue collection. Tax elasticity, on the other hand, measures the pure response of tax revenues to changes in the national income. ....Read more