Monday, June 6, 2011

Increase in Computer Monitor Prices Inevitable

South African Revenue ServiceManufacturers of computers and computer monitors as well as retailers have warned consumers of a pending increase in the price of computer monitors ever since the South African Revenue Service imposed an excise duty of 7%.

Since April, a 7% ad valorem tax, which was initially scrapped back in 2004, has been reintroduced due to that fact that some computer monitors are being used also as a television. The good news is that the price increases are being introduced gradually.

Spokesman for the South African Revenue Service Adrian Lackay stated a week ago that prior to April computer monitors and televisions did not have the same tax structure. Televisions were subject to a 7% ad valorem duty whereas computer monitors did not attract any ad valorem duty whatsoever.

As a result of that, computer monitors were imported duty-free for use in the television industry "to the detriment of the local manufacturing TV industry," according to Lackay. "The alignment of taxes between monitors and TVs will hopefully curb any further abuse to the benefit of the local manufacturing industry."

It was also noted that your average variety monitor that you usually find in an office would not be affected by the tax increase. Any monitor that exceeds 20.8" will attract a 25% import duty as well as a 7% ad valorem tax, according to CEO of Mustek David Kan.

Kan also noted that no company could absorb the increase so importers will pass it on through the channel and then on to consumers. According to Kan, "The margin in the IT hardware industry is too thin not to pass on."

According to IT Product Manager at Samsung Bennie Budler, "The major implication will be that the price of all monitors bigger than 21.5" would be about 34.4% higher. The extra cost will have implications for the customer."

It is expected that the prices of monitors are going to increase by around 15% and Kan stated that there had been no formal explanation from the South African Revenue Service about the new tax. According to Kan, "I do not understand why our country is protecting the TV assembly industry. There is no local content and it creates very limited jobs."

Kan also added that the International Trade Administration Commission's decision to protect the local TV assembly sector must be challenged. "If the tax is removed, every household will be benefiting from paying less. Nowadays, TV is not a luxury item."

In a recent statement from Samsung, the company noted that recent computer monitor shipments were halted in April in order to ensure that every company importing computer monitors was declaring them in the correct way. Lackay stated that larger monitors were now all liable to the same duty. The new tax amendment had been created to ensure that, from a duty perspective, a monitor's principle application was now purely of academic interest.

Source: Business Day - Computer monitor tax 'will push up price'

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