What is meant by tax elasticity in the financial sector?
Tax revenue is the proportion of the tax revenue that has been revised to the GDP per capita.
This means the above statement means how much tax revenue will increase without any change in the tax rate (increase or decrease) with the GDP ratio.
Consequently, the tax exemption shows the financial performance of the government and the ‘joy’ of the government (tax revenue). This indicates a higher dependency on tax revenue for GDP growth.
Tax elasticity price will increase the price before the concept of elasticity or the purchase of an item incremental price (ie: buyers before buying an item or before finding an alternate source). Except, in this case, the question can increase tax increase before it changes behaviour.
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