A tax is considered buoyant when its revenue increases faster than the growth of:
Correct answer: A. National income or the tax base
- A. National income or the tax base
- B. Government borrowing from banks
- C. Imports of capital goods
- D. The central bank's foreign reserves
Explanation
Tax buoyancy measures how responsive tax revenue is to changes in national income or the relevant tax base, including the effects of policy changes. It is different from simply observing whether revenue rises in absolute terms.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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