Communications minister Solly Malatsi has said he has been in talks with the National Treasury about making smartphones more affordable and scrapping the luxury tax on some devices, GeekHub reports. The minister has emphasised his "obsession" with removing or at least setting a threshold to the ad valorem or luxury tax on smart devices to make it more affordable for people to access this technology. "We are not saying remove all the associated luxury goods taxes on smart devices, but have a threshold," Malatsi told MyBroadband in a recent interview.
In the South African context, ad valorem is a tax on products deemed luxury items such as motor vehicles, electronic equipment, and cosmetics. A flat rate of 9% is applied to technology products. This is a particularly salient issue given South Africa's plan to phase out 2G and 3G networks over the next few years, eventually rendering cell phones using these technologies useless.
However, to ensure a smooth migration to 4G and 5G, entry-level devices must be more affordable and sales of new 2G and 3G phones may need to be restricted. Smartphones also offer numerous other benefits in today's digital economy. "The cost to communicate in Africa is very high," Malatsi told the SABC at the inaugural AfricaCom Ministerial Summit.
"We have to find policy interventions to bring relief and to get poor people, mostly in rural areas, to become active in the digital world." Malatsi said that by connecting people, they are being provided with .