Often duties and taxes are imposed on cars that are imported from other countries. What types of incentives are these duties and taxes?

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Smudge

2 August, 12:05

Often duties and taxes are imposed on cars that are imported from other countries. What types of incentives are these duties and taxes?

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Moses · Answer 1

These duties or taxes are called tariffs. They are a type of negative incentive. A negative incentive is one that tries to persuade people to NOT do something.

The reason a country might add extra taxes on goods imported from other countries is to make national goods cheaper in comparison. This leads to an increased demand for national goods and protects local industries.