South Africa’s government plans to remove the luxury excise duty on smartphones under 2,500 rand, effective April 1, 2025. This move aims to enhance affordability and promote digital inclusion for low-income households. The country is also set to phase out 2G and 3G networks by the end of 2027, although critics warn this could exacerbate the digital divide.
The South African government has announced a proposal to abolish the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37) effective from April 1, 2025. This initiative aims to facilitate digital access for low-income households, as stated in a recent budget statement by the National Treasury. Under the current policy, a 9% ad valorem excise duty is imposed on smartphones, which the government now proposes to limit to devices exceeding the specified price threshold upon export to South Africa.
This amendment is intended to improve smartphone affordability, especially for those at the lower end of the market, thereby promoting digital inclusion. Notably, this decision aligns with South Africa’s strategy to phase out 2G and 3G networks by December 31, 2027, to allocate spectrum for more advanced 4G LTE and 5G technologies. Critics, however, have expressed concerns that discontinuing these older networks might widen the digital gap, particularly for low-income consumers in remote regions who may lack access to more modern smartphones.
Communications Minister Solly Malatsi articulated last year that the existing excise duties significantly contribute to increased costs of smart devices. He emphasized that discussions were ongoing with the treasury to further reduce these financial barriers.
In conclusion, the South African government’s proposal to eliminate the luxury excise duty on lower-value smartphones reflects a commitment to enhance digital accessibility for disadvantaged households. While this is a positive step towards bridging the digital divide, there remains a cautionary note regarding the transition from older network technologies, which could pose challenges for certain populations. The outcome of this initiative will be closely monitored as the country moves forward in its digital transformation efforts.
Original Source: www.tradingview.com
