Task:

Utilise a tax within a demand and supply model for luxury cars, to analyse the Luxury 

Car Tax described on this webpage. Although in reality it is a percentage-based tax 

with even other complexities such as a threshold, as a simplification you can consider 

it as a basic per-unit tax of a fixed amount (and do not need to follow the correct 

numbers), to make it more similar to examples studies in our course.

The article says that the “tax is paid by dealers”. Explain why then it is not just the 

dealers (sellers) who are impacted by the tax. Detail the impacts caused by this tax on 

not just the dealers, but also on consumers, the government, and overall economic 

efficiency.

Ensure that you use diagrams where relevant to support your answer, and make sure 

to use key terminology and course concepts where appropriate.

Explanation & Answer length: 800 Words6 attachmentsSlide 1 of 6

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UNFORMATTED ATTACHMENT PREVIEW

Assignment 3 ECON1012 Principles of Economics Semester 2 2021 Course Learning Outcomes: 1, 3 & 4 Topic/s of Primary Focus: Government Intervention – The Cost of Interfering with Market Forces (May also include content from previous topics.) Read the following excerpts from the Carsguide webpage ‘Luxury car tax Australia: What is the LCT?’ (2 March 2021) https://www.carsguide.com.au/car-advice/luxury-car-tax-australia-what-is-the-lct-82593 What is luxury car tax? Luxury Car Tax (LCT) is a tariff on new cars (those less than two years old) sold at a price that’s above a value threshold set by the Australian Tax Office (ATO), and it’s called a Luxury tax because theoretically it only applies to expensive cars at the luxurious end of the market. The tax is paid by dealers who import or sell luxury cars and also by individuals who import

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