Why do countries add a tax onto “luxury vehicles”? Just seems like another way to sting the customer another unnecessary tax?
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Many countries don’t manufacture their own vehicles and very few countries manufacture luxury vehicles. Normal vehicles are necessary for the economy. Luxury vehicles not so much. This is one way to restrict sales of these vehicles to reduce the revenue going overseas rather than to local industry. If a country has some domestic car assembly factories, this further incentivizes sales of these vehicles over luxury vehicles.
Also, only fairly wealthy people can purchase these vehicles. So they are generally a bit populist “tax the rich more” strategy that might play well in politics. In general, these kind of taxes probably don’t generate a significant part of government tax revenue – but it is politically popular.
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