The South African government will remove luxury taxes on smartphones under R2,500 starting April 1, 2025, to promote digital inclusion for low-income households. Currently, a 9% excise duty applies to smartphones, but future duties will target only higher-priced devices. This change coincides with the planned shutdown of 2G and 3G networks by the end of 2027, raising concerns about accessibility for poorer consumers.
The South African government has announced the removal of the luxury excise duty on smartphones priced under R2,500, effective from April 1, 2025. This decision, as stated by the national treasury, aims to bolster digital adoption among low-income households. Presently, smartphones are subjected to an ad valorem excise duty of 9%, but the new proposal will focus these duties only on higher-priced devices.
This initiative is intended to enhance smartphone affordability, particularly for those at the lower end of the market, thereby promoting digital inclusion. This policy shift coincides with South Africa’s plan to eliminate 2G and 3G networks by December 31, 2027, in order to allocate frequencies for advanced 4G/LTE and 5G networks.
However, some critics have expressed concerns that discontinuing 2G and 3G may deepen the digital divide, especially for low-income consumers in rural areas who may not afford upgraded smartphones that are compatible with faster networks. The Communications Minister, Solly Malatsi, has acknowledged that current excise duties contribute significantly to the price of smart devices and has been in discussions with the treasury regarding potential reductions of these taxes.
In conclusion, the South African government’s decision to eliminate the luxury excise duty on smartphones priced below R2,500 is a critical step towards facilitating digital access for low-income households. As the nation prepares for the sunset of 2G and 3G networks, this measure aims to promote greater smartphone affordability and enhance digital inclusion. Nonetheless, the accompanying concerns about the potential exacerbation of the digital divide among vulnerable populations must be addressed to ensure equitable access to technology.
Original Source: techcentral.co.za
