Revenue production of a tax system is measured through as buoyancy and elasticity.
a) Distinguish buoyancy from elasticity of a tax.(4 marks)
b) State and explain two methods that can be used to estimate tax elasticities. (6 marks)
Explain the elasticity of taxes with reference to:
a) Value Added Tax (VAT)(2 marks)
b) Income tax(2 marks)
c) Customs and excise duty(2 marks)
d) As part of institutional reforms of tax systems, governments usually establish advisory units within tax departments such as Tax Policy Units (IPU). What role would such TPUs play in your country?(4 marks)

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The detailed answer for the above question is provided below A Buoyancy and elasticity are two important components of a tax systems revenue productio... View the full answer