EU to jack up smartphone prices

 

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Posted on 17 Dec 2008 at 17:18

Prices of the newest mobile phones may soon rocket, as the European Commission admitted it is considering introducing a tax for high-end handsets.

The EU Commission put together a formal proposal to reclassify some phones as "multi-functional devices", which would trigger a 14 per cent tax on phones with TV receivers, and a 3.7 per cent tax enforced on navigation-enabled phones.

"Replacement markets like Europe rely on new technology, and if we are now adding tax to it this will make consumers think twice before upgrading," said Carolina Milanesi, analyst at research firm Gartner.

In the proposal, the Commission aims to allow duties to be imposed on handsets with the most advanced features, such as high-quality cameras and full QWERTY keyboards.

"While only a small number of sophisticated mobile phones in the industry would be affected today, due to rapid technological advances, the number would likely rise significantly in the coming months and years," said a Nokia spokesman.

However, while GPS chips are currently used mostly in top-end cellphones, Nokia and other manufacturers, are now looking to use them in mass-market phones.

"We estimate the planned taxes would increase the average price of a navigation-enabled or TV-enabled mobile phone by between £5 and £40 in 2009," said Neil Mawston from Strategy Analytics.

The EU Commission responded claiming it had put the proposal forward in an attempt to unify taxation across all 27 EU countries, as Germany and Netherlands said they would introduce similar charges.

However, Maria Assimakopoulou, spokeswoman for EU Tax Commissioner Laszlo Kovacs, said that a decision was not imminent as the Commission is only just starting discussions with member states.

"These discussions will not be concluded for at least another 6 months," she said.

Author: Dawinderpal Sahota