Sweden, Finland add voices to EU phone tax protest

By Tarmo Virki, European technology correspondent

HELSINKI, Feb 6 (Reuters) - Finland and Sweden have appealed against a European Commission plan to start taxing advanced cellphones, something the industry says could kill emerging businesses such as mobile TV broadcasting.

Ministers from Sweden and Finland -- the homes of Ericsson (ERICb.ST) and Nokia (NOK1V.HE) -- sent a joint letter to the Commission, claiming EU plans could hurt the European mobile industry and damage trade relations.

The Commission plans to reclassify some phones as "multi-functional devices", including those with high-quality cameras and full qwerty keyboards, triggering a 14 percent tax on phones with TV receivers and a 3.7 percent tax on navigation-enabled phones.

"In addition to considerably higher tariff rates on mobile phones, global supply chains would also be negatively affected and companies would face logistical difficulties," the Nordic ministers said in the letter, seen by Reuters.

"The introduction of these measures would likely lead to challenges in terms of WTO dispute settlement, or alternatively, similar reclassification decisions that would erect barriers to EU exports in third-country markets."

The new taxes would put additional pressure on the already ailing industry.

Handset sales in Europe have been falling since the start of 2008 as consumers delay purchases due to the slowing economy, and the market is expected to drop sharply this year.

The Commission has said it put the proposal forward to try to unify taxation across the 27-country bloc after Germany and the Netherlands said they would introduce similar charges.