South Africa plans to eliminate the luxury excise duty on smartphones under 2,500 rand starting April 1, 2025, to improve digital access for low-income households. This decision coincides with the upcoming shutdown of 2G and 3G networks by December 2027, which may raise concerns regarding affordability and the digital divide. Communications Minister Solly Malatsi is actively negotiating reductions in the excise duties that inflate device costs.
The South African government is set to eliminate the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37) starting April 1, 2025. This initiative, as stated by the National Treasury, aims to promote digital access for low-income households by enhancing smartphone affordability at the lower price range. Currently, a 9% ad valorem excise duty is levied on smartphones regardless of their prices.
The proposal aligns with South Africa’s broader initiative to advance digital inclusion as the country plans to shut down its 2G and 3G networks by December 31, 2027. This shutdown aims to reallocate radio frequencies to support faster 4G LTE and 5G technologies. However, concerns have been raised regarding the potential exacerbation of the digital divide, as many low-income individuals may struggle to afford newer smartphones compatible with the upgraded networks.
Communications Minister Solly Malatsi previously noted that the excise duties contribute to the elevated cost of smart devices. He indicated that constructive discussions with the Treasury were underway to address and reduce these financial barriers, thus facilitating greater access for the public.
In summary, the South African government’s decision to remove luxury duties on lower value smartphones is a proactive measure aimed at enhancing digital access for low-income households. This policy will not only make smartphones more affordable but also aligns with the nation’s efforts to phase out older network technologies. Ongoing discussions with Treasury underscore the commitment to reducing the financial obstacles that limit device access for the underserved populations.
Original Source: www.tradingview.com
