By Nqobile Dludla
CAPE TOWN (Reuters) – South Africa’s Communications Minister Solly Malatsi said he had held preliminary talks with the Treasury on cutting taxes on smartphones to make them more affordable as the country prepares for the switch-off of 2G and 3G networks.
“We will be continuing with those discussions but the early signs are encouraging,” Malatsi told Reuters on the sidelines of the Africa Tech conference.
In its Next Generation Radio Frequency Spectrum Policy paper, the government has set Dec. 31, 2027 as the total shutdown date of these networks.
To fully benefit from rapid technological advancements, the government’s policy proposes the gradual phasing out and shutting down of older networks, such as 2G and 3G to free up radio waves for faster 4G LTE and 5G networks.
But critics of the plan have said that it risks exacerbating the digital divide as many low-income consumers, particularly those in remote areas, may not afford newer smartphones designed for faster networks.
“We’ve had preliminary engagements with Treasury about the proposals we have around smart devices and making them affordable,” Malatsi said.
“Our proposal is that the ad valorem tax contributes to the high cost of smart devices. When you eliminate that cost it will help drive down affordability and that’s my key interest,” he added.
The South African Revenue Service charges an ad valorem tax, or a luxury excise tax, on smartphones, over and above Value Added Tax and regular import duties, substantially increasing the price of these devices.
The county’s two biggest telecom operators MTN and Vodacom have said that transition needs collaboration between operators, the regulator and government.
Telecoms group, the Association of Comms and Technology, has said that the government should also assist the transition by lowering the taxes and refraining from imposing a strict deadline.
(Reporting by Nqobile Dludla; Editing by Barbara Lewis and Tomasz Janowski)
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