South Africa aims to remove luxury excise duty on smartphones under 2,500 rand to boost digital access for low-income households. This change, effective April 1, 2025, is part of a broader strategy coinciding with the planned shutdown of 2G and 3G networks by 2027. While enhancing affordability, concerns linger about access to affordable smartphones after network phase-outs.
The South African government has announced plans to eliminate the luxury excise duty on smartphones priced below 2,500 rand ($136.37) starting April 1. This initiative aims to foster digital adoption among low-income households, as stated by the National Treasury. Currently, smartphones incur a 9% ad valorem excise duty, but the proposed change would make smartphones more affordable for consumers in the lower price range.
According to the budget statement, the new duty rate will apply only to smartphones exceeding 2,500 rand at the time of export to South Africa, effective from April 1, 2025. This adjustment intends to enhance smartphone affordability and promote digital inclusion among economically disadvantaged households.
This proposal coincides with South Africa’s plan to deactivate 2G and 3G networks by December 31, 2027. The goal is to allocate more radio waves for advanced 4G LTE and upcoming 5G networks. However, critics warn that shutting down 2G and 3G could widen the digital divide, particularly impacting low-income individuals and consumers in rural locations who may lack access to newer smartphones made for faster networks.
Communications Minister Solly Malatsi previously stated to Reuters that the excise duties contribute significantly to the high prices of smart devices, indicating ongoing discussions with the treasury to reduce these costs. Understanding the implications of these changes is crucial for enhancing digital access and equality in South Africa.
The government’s proposed removal of luxury excise duty on lower value smartphones is a strategic move aimed at improving digital accessibility for low-income households. By making smartphones more affordable, this initiative supports broader efforts for digital inclusion. However, the shutdown of 2G and 3G networks raises valid concerns about potential widening of the digital divide for underserved populations.
Original Source: www.tradingview.com
