Agreed! Chasing their tail is a very popular game that most cats and dogs like to do. I've never seen a cat or dog that didn't go through that stage at one point.
Assuming the cat doesn't have any fleas, i'd check the tail for tick and mosquito bites, rashes, or loss of fur. If there are no signs, then use rubbing alchohol. The smell and bitter taste will turn the cat's curiousity off towards the tail. There's also this spray called Bitter Apple that you can pick up at any pet store that works really well.