Rain Mobile

VAT increase is set to make your phone bills more expensive

It’s not just data that needs to fall…

Rain Mobile

The first budget delivered under the Ramaphosa administration was maligned for being “an attack on the poor“. It now seems that those critics may have been on to something, given how the VAT increase is set to affect our cell phones.

Vodacom were the first to buckle under the financial strain. They began sending SMS warnings out to customers about how the VAT hike – which has risen from 14% to 15% – will affect their services:

How will the VAT increase affect Vodacom customers?

“Dear Valued Customer, The National Treasury announced an increase in Value Added Tax (VAT) from 14% to 15% effective 1 April, 2018. There will hence be an adjustment to your subscription as our services are subject to VAT. Yours sincerely, Vodacom.”

MTN release new bundles, but concede to VAT hike

MTN was the next to follow suit. They confirmed that their bills would increase to reflect the Treasury’s increase of value-added tax. However, they attempted to soften the blow by releasing a new set of data bundles and prices.

According to an official statement, these new packages will reduce the threat of “out-of-bundle” billing surprises and have been tailored to suit a more competitive market. In general, data has fallen. You can see their price list here.

Vodacom representatives were more tight-lipped when we spoke to them, however. They very much stayed “on-script” when asked about what the VAT increases would mean for their operations:

“We have to be compliant with legislation. So that means all billable services will be subject to the VAT increase as communicated by the Minister of Finance in the Budget Speech. This includes your contract subscription, bundle services, and out-of-bundle rates for voice, data and SMS services.”

“We are working on the implementation of the VAT increase across all our services. The new price structure for the services in question will be published by 20 March 2018.”

Will Cell C and Telkom also raise their contract prices?

Neither Cell C nor Telkom would be drawn on what the hikes mean for their cell phone contracts. Although, the former did confirm they’d be making an announcement shortly, “once the finer details had been finalised”.

It looks like Malusi Gigaba’s Budget really will have a tangible effect on those who have the least to spare.