The ICT and telecoms industries are some of the most taxed in the Caribbean region. In this article, we examine the import charges payable on mobile/cellular phones imported into cross-section of Caribbean countries, and briefly discuss the implications of the status quo, and what is needed to realise the goal of 100% internet access.

 

Over the past week or so, and in our most recent podcast episode, we have been discussing Internet access and affordability, in order achieve Universal Internet Access. As was mentioned in our interview with Dhanaraj Thakur of the Alliance for Internet Affordability, it is projected that half on the world population is expected to have Internet access by mid-2019. However, based on current trends, and contrary to all of the global targets and goals that have been set, universal Internet access will not be achieved by 2025. The more likely timeframe is around 2043!

One of the biggest hurdles to Internet access is acquiring a suitable device. For many people, that would be a mobile/cellular phone, but to have the requisite functionality to facilitate Internet browsing, use of a broad range of applications, etc., a smartphone would be ideal. However, in a release by the Jamaica Customs Agency, which was published in the press last week, the public was reminded of the duties and taxes payable on mobile/cellular phones imported to the country:

Customs, in a release, said the duty structure for mobile phones is:

  • Import Duty – 20%
  • General Consumption Tax – 25%
  • Environmental Levy – 0.5%
  • Standard Compliance Fee – 0.3%

According to Jamaica Customs, the above charges are calculated on the Cost, Insurance & Freight value, noting that a Customs Administrative Fee is also applicable to the clearance of goods.

(Source:  Jamaica Observer)

 

From the above, individuals would be paying a minimum of 48.5% of the Cost, insurance and Freight value for the phone – not including Customs’ administrative (and other) fees. Further, that rate does not include the mark-up that stores would impose to cover their own costs and (a nominal) profit.

Hence, it should come as no surprise why smartphones are so expensive in Jamaica, but more importantly, the impact of such high import duties and charges on the extent to which those in the lower socio-economic bracket are able to afford such devices.

High import charges is the norm across the Caribbean

Although the situation in Jamaica was the impetus for this article, having (relatively) high Customs charges on smartphones, and other electronic devices, tends to be the norm in that Caribbean. Below (Table 1) is an outline of the major Customs taxes and duties payable on mobile/cellular phones and smartphones in a cross-section of Caribbean countries. It must be emphasised that the taxes and duties listed may not be complete. Typically, Customs processing and handling fees must also be paid, along with other taxes and charges.

Customs duties and charges payable on mobile/cellular phones imported into select Caribbean countries (Sources: assorted Government websites)

What are the rates of the import duties and charges payable on mobile/cellular phones in your home country? Tell us in the comments section below.

 

Based on the above, and although all of the charges payable might not be fully captured, the duties and charges payable on an imported mobile/cellular phone ranges from around 22.5% of the landed cost of the phone in the Bahamas, to a high of 55.5% in Saint Kitts and Nevis. However, when all of the other ‘minor fees and charges’ are added, there could be a substantial bump in the cost – closer to 50% or 60% of the landed cost of a phone.

Access versus government revenue

As mentioned earlier, owning a suitable device is a crucial hurdle in securing Internet access. Even if an individual is not buying a top-of-the-line smartphone, he/she might be paying at least double the list price of the phone, which again, for those in the lower socio-economic brackets might be beyond their budget.

Moreover, this scenario highlights an uneasy tension: the need of governments to generate revenues through the import charges levied on telecoms devices, versus the high prices of smartphones – making them out of the reach of those who cannot afford, and more importantly, limiting their ability to access the Internet.

The exponential growth of telecoms and ICTs, along with the take-up of telecoms/ICT services has resulted in a common trend across many countries: the imposition of a broad range of special taxes and charges on the telecoms/ICT sector. For example, in Jamaica, the General Consumption Tax levied on telecoms goods and services is nearly 10 percentage points higher, at 25%, whilst the standard GCT rate is 16.5%. And in Trinidad and Tobago, there is now an online purchase tax of 7%, which is levied on goods purchased via the Internet and imported into the country.

Are smartphones still a luxury item?

Ultimately, and based on the posture Caribbean countries have adopted, it appears that mobile/cellular phones and smartphones are still considered luxury items, and so are subject to relatively high import duties and charges. As a result (and almost by definition of luxury items), it is not expected that all citizens will be able to afford them. However, such as position is  contrary to many of the targets and goals with respect to universal Internet access that have been established by organisations, such as the United Nations and the Broadband Commission, to which Caribbean countries, either explicitly or tacitly, have agreed.

Hence Caribbean countries may need to revisit their import tariffs, against their own goals and expectations with respect to facilitating greater access to Internet (and other telecoms) services by every resident in their respective country. If universal internet access is to be achieved, the barrier to device ownership will need to be lowered – to make mobile/cellular phones smartphones more affordable to all.

 

 

Image credit:  U.S. Navy (Wikimedia Commons)