Mobile Phone Blog

I stumbled across an article recently which posed some very interesting questions. It’s apparently possible that an EU tax directive could see us paying more money for top-end mobile phones. This could have a devastating affect on the whole mobile phone sector.

It seems that the question being asked is when is a mobile phone more than a mobile phone?

Whilst it may seem insignificant at the moment, it could be a very important issue for those of us who like multifunctional and powerful mobiles. In the not too distant future, the European Commission are to vote on whether top-end handsets like the Sony Ericsson Xperia X1 and shortly due Nokia N97 are classed as ‘mobile phones’ or ‘multifunction devices that do mobile telephony’. Okay, no big deal there then. Wrong…………….if they decide to put them into a different classification, the price could well increase which is bad news for us all.

At the risk of boring you I will try and explain the history behind this whole façade. Some 12 years ago the Information Technology Agreement (ITA) was formed and an agreement took place:
To help boost the global economy, all computer-related equipment would have zero import duties placed on them.
The simple upshot of this agreement means that no import tax was placed on items like home PCs and mobile phones. This was part of the reason why they have boomed in sales ever since.

From the information I’ve been able to gather it seems the European Commission didn’t expect mobiles to increase in technical functionality the way they have. So now we are in a position where tax officials at the European Commission think the ITA is being stretched beyond their initial function and that some mobile phones are no longer just ‘mobile phones’ and should now be liable for import tax.

I can’t help but think the timing is no coincidence given the current ‘credit crunch’. The economic crisis seems to be spreading around the world and governments are being forced into taking measures to try and stave it such as reducing VAT to 15%. Although I can’t work out that approach myself. I would have though it would make more sense to sort out base rates and GDP instead of trying to get Joe public to spend more with money they haven’t got. It seems quite simple to me. We are in an economic crisis and if the EU puts prices up on items like high-end mobile phones, people simply can’t afford them and sales figures suffer.

An interesting situation to note is that whilst the European Commission is pushing for import tax in top-end mobiles, Telecoms Commissioner Viviane Reding is asking for more features to be put on mobiles, specifically, mobile TV. It seems that not everyone in the Commission thinks reclassifying mobiles is the way forward.

It makes you wonder where the issue has arisen from considering some of the people within the EU are not keen on the tax implementation. We don’t know anything for sure but we’ve heard whispers that manufacturers of GPS devices aren’t happy that their sales are falling as a result of mobiles having built-in GPS systems.

So, will they, won’t they???????????

Despite the wishes of Commission tax officials, it’s by no means a given that the import tax will be applied. Adding import tax on to mobile phones has already proved extremely unpopular with both America and Japan who have filed formal complaints with the EU and World Trade Organisation.

As they say, every cloud has a silver lining and that comes in the form of printers. Many printers now also have scanning and copying functions built into them and that led to the same issue as mobiles. However, Hewlett-Packard and Kip weren’t buying into the decision and went to court over it. The judicial verdict was any multifunction device should be determined by its main function which in this case was printing and therefore, is exempt from import duty.

Using this approach, handsets such as the Nokia N97 may well have multiple functions on them but at the end of the day they are still mobile phones. So, it’s possible that the European Commission may well vote to increase the price of mobiles but given the opposition they are likely to encounter from around the globe we suspect it may not happen.