I appreciate this isn’t helpful, but if you’re spunking 40 grand on a car, you can afford the tax right?
Being able to afford something and being comfortable paying it are two different things. Personally, a car that will incur luxury tax is very off-putting as it's just money down the drain. It would have to be something with a really massive discount to appeal, given the first couple of K are swallowed up just on tax.
It's also another tax threshold which doesn't move with inflation. It's already 4 years on, and more & more non luxury cars are being sucked into this cost as time passes.
Perfect example of this is the Mustang V8. A few years ago, there was an opportunity whereby the tax changed so it dropped from like £515/year or whatever (emissions based) to the new system of £140/year. At the time, the base spec Mustang was under £40k list. So if you bought one second hand first registered April 2017, then you'd avoid high emissions tax, avoid luxury car tax, and avoid first year tax surcharge. But now the list price has gone up over £40k I think so the opportunity has passed.
That said, personally I don't think it needs to rise with inflation, if more and more cars get sucked into the luxury bracket and helps boost tax revenue then so be it, they will need to do something to offset reduced fuel tax revenue. £40k is still 'luxury' territory in that most cars you can buy for over £40k have a cheaper alternative available of the same size. Technically people don't need a flash Audi or Merc SUV, they could get one from a more budget oriented marque.
Remember this only applies the first 5 years as well. The average bloke on the street isn't buying a £40k+ list motor until it's a few years old at least. So the bulk of that tax is getting paid by the flash harrys rolling around in new metal