Ad valorem excise duties on some luxury goods were one of the tax increases tabled in February’s Budget Speech, up from 7 percent to 9 percent. The Treasury has stated its intention to change the definition of cell phones to include smartphones, so that they too attract ad valorem taxes.
Treasury said, “Government will also consult to replace the flat rate for cell phones, with a progressive rate structure based on the value of the phone.”
weFix CEO, Alex Fourie, said that weFix will keep a close eye on Treasury’s consultation process to ensure that the entry- and mid-level smartphones are not taxed unduly.
“Not all smartphones are luxuries – new entry-level devices are regularly available for under R500. Our concern is that undue taxation of entry- and mid-level devices will reduce access to what are communication and business necessities for millions of South Africans,” says Fourie.
“It is well-documented that affordable smart devices have put the Internet into the hands of South Africa students, consumers and business owners in all sectors, increasing digital literacy, access to news and educational material, and benefiting the economy as a whole.”
South Africa has 21 million internet users, according to the Internet Access in South Africa 2017 study by World Wide Worx. Of that total, 7 million access the Internet via mobile devices exclusively.
Fourie says that one way for consumers to reduce the impact of mobile devices on their budgets – which has the added bonus of lessening their exposure to tax – is to consider repairing or purchasing refurbished smartphones.
“Mobile devices that are repaired and refurbished having been preowned or damaged during shipment, demo units that are shop-soiled, or new devices that have a fault upon opening, are a really affordable alternative to new devices, particularly in light of the proposed tax increases,” says Fourie.
weFix intends to absorb the imminent VAT increase of 1 percent to further encourage consumers to make use of repair and refurbishment services offered by providers like weFix.
“We understand that for many consumers, going without their mobile devices is unthinkable – and not because they can’t be without social media,” says Fourie.
“We want to keep South Africans connected to their businesses, to their study materials, to the news and to their social networks, hence our commitment to keeping our repair services as affordable as possible.”