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 the tax revenues increase more than proportionately in response to a rise in national income or output. A tax is buoyant when revenues increase by more than, say, 1 per cent for a 1 per cent increase in GDP. Usually, tax elasticity is considered a better indicator to measure tax responsiveness.

Tax elasticity is a measure designed for this purpose since it measures the responsiveness of tax revenue to a change in national income or output after controlling for exogenous influences such as discretionary changes in tax policy. If a tax is elastic, a one percent increase in GNP or GDP results in a greater than one percent increase in revenue from the tax holding constant for discretionary tax changes