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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>Why do countries add a tax onto “luxury vehicles”? Just seems like another way to sting the customer another unnecessary tax?
A luxury item is, by its very nature, unnecessary, u/Peachy021.
In this line of thinking someone who **still** insists on purchasing a luxury item and thus burden a society’s productive output unnecessarily is taxed while someone purchasing only necessary items is not taxed.
These kinds of taxes generally encourage resource conservation while at the same time not putting a burden on those who cannot afford to be burdened any more. That can make them a very desirable kind of tax.
>Why do countries add a tax onto “luxury vehicles”? Just seems like another way to sting the customer another unnecessary tax?
A luxury item is, by its very nature, unnecessary, u/Peachy021.
In this line of thinking someone who **still** insists on purchasing a luxury item and thus burden a society’s productive output unnecessarily is taxed while someone purchasing only necessary items is not taxed.
These kinds of taxes generally encourage resource conservation while at the same time not putting a burden on those who cannot afford to be burdened any more. That can make them a very desirable kind of tax.
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.
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.
Luxury goods are bough by wealthy peoples who have more than enough money to live confortably, thus can pay more taxes.
It’s a good way to get more money to the governement without hitting the middle/working class.
Luxury good taxes have a few advantages over an higher income tax: they can effectively tax wealth coming from non income sources, and only affect non-essential spending (so people w/ high income, but also high spending on essential stuff such as rent aren’t affected).
Luxury goods are bough by wealthy peoples who have more than enough money to live confortably, thus can pay more taxes.
It’s a good way to get more money to the governement without hitting the middle/working class.
Luxury good taxes have a few advantages over an higher income tax: they can effectively tax wealth coming from non income sources, and only affect non-essential spending (so people w/ high income, but also high spending on essential stuff such as rent aren’t affected).
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