China adds another 10 percent tax to expensive cars

It's meant in part to reduce emissions, but it's also a cultural tax.

"Shucks! I only had enough money for the purchase price of this Ferrari and not a penny more."

Photo by Nick Miotke/Roadshow

Is there anything taxes can't solve? (That's rhetorical. Please don't answer.) China seems to think so, as it's slapping another 10 percent tariff on luxury vehicles and supercars.

China will add another 10 percent tax on the aforementioned high-end vehicles, so long as their prices start at or above 1.3 million yuan (about $189,000), Reuters reports. The tax is meant to have two effects -- cull public luxury expenditures and reduce vehicle emissions.

Xi Jinping, China's president, isn't a big fan of overt displays of wealth, and his administration has attempted to crack down on the practice by levying additional taxes on those who can likely afford to pay and subsequently ignore said taxes. As luxury car prices have slowly started dropping in China, the tax shouldn't amount to a large hit in the ol' pocketbook.

Both BMW and Audi told Reuters that the cars they sell that fall into this price bracket comprise very little of their respective sales numbers. Of course, companies must take any potential sales hit seriously, but if nobody's truly freaking out over in the Middle Kingdom, it shouldn't raise much concern.

While taxing ostentatious show-offs is a cultural issue more than anything, the environment is not. China's air quality ranges somewhere between "bad" and "not great," which is why we're seeing a massive jump in Chinese companies developing electric vehicles. Keeping its air clean enough for future generations is a difficult task, and while the tax isn't exactly going to clear the sky tomorrow, it's a start.

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