EU mulls cellphone duty plan, industry irate

By Tarmo Virki

HELSINKI (Reuters) - The European Union executive is planning to tax some cellphones, a move which would mean higher prices for consumers, the wireless industry said.

The European Commission last week sent to member states a formal proposal to reclassify some phones as "multi-functional devices", which would trigger a 14-percent tax on phones with TV receivers and 3.7 percent on navigation-enabled phones.

The new taxes would put additional pressure on the already ailing industry. Handset sales in Europe have dropped since start of 2008 as consumers delayed purchases due to the slowing economy, and the market is expected to fall further next year.

"European companies would face a further costly blow to their operations in the EU, at a time when many are struggling to maintain profitability, given the economic crisis," trade lobby EICTA, which represents all top cellphone vendors and many other global technology firms, said in a statement.

Europe's top cellphone vendors Nokia and Sony Ericsson -- who together make almost every second phone sold in the world -- are strongly against the tax.

"These new duties would inevitably lead to a high increase in consumer pricing at a time where we are all struggling to keep prices as low as possible," said a spokeswoman for Sony Ericsson, the world's third-largest cellphone maker.

A spokesman for Nokia said: "There is a danger that this proposal would put the latest technology out of the reach of European consumers as it would simply push up the price of sophisticated mobile phones. This is in nobody's interest."