France Pondering 'Google Tax' to Assist Publishing Sector

The French government, concerned about the fate of publishing and media companies losing money because of online content distribution, is considering the introduction of a tax on the advertising revenue generated by Internet companies.

Dubbed a 'Google tax' in various parts of the media, Digital Trends being one outlet using that description, the idea of a levy on the income earned from advertisers by the likes of Google, Yahoo, MSN, AOL and Facebook has come out of a report produced for France's Culture Ministry. In addition Internet service providers may be liable to a tax. According to the Financial Times French President Nicolas Sarkozy has asked his Finance Ministry to investigate the practicality of a tax on Internet advertising revenue and told the authorities that deal with matters of competition in France to look at a possible “abuse of dominant position” by companies such as Google and Facebook. If a 'Google tax' is eventually introduced writers, musicians and publishers would receive funding to help them use the Internet to their own financial advantage. Responding to the assertion in the report for the Culture Ministry that his company is "profiting without any consideration" for music artists and book publishers Google's Senior Policy Manager, AFP refers to him as Public Affairs Director, in France, Olivier Esper, said:

We don’t think introducing an additional tax on Internet advertising is the right way forward as it could slow down innovation

He is quoted as also saying:

There is an opportunity here to promote innovative solutions, rather than extending the attitude of opposition between the Internet world and the cultural world, for example through the approach of taxation

One of those tasked with producing the report for the Culture Ministry was Patrick Zelnick, a former music executive Cnet News confirms produced songs for First Lady of France, Carla Bruni-Sarkozy. Mr Zelnick reportedly told Liberation magazine:

We're not going to wait for the European Union to go along with this Google tax. This [tax] is legally and technically feasible to implement without waiting for the agreement of our European partners

With regard to the industry in which he once worked Mr Zelnick explained:

The music industry is in the worst situation--worse than the publishing industry. They are in great danger. So we must act quickly

The Financial Times states that the report has proposed the government issue music cards worth €25 ($36) to young people to motivate them to legally download "cultural works". Any tax subsequently introduced would apply to advertising revenue generated by a click in France on an online ad or sponsored link and would affect companies who may be based outside France. The report's authors do not see any legal obstacles to taxing companies based in other countries, although one report has apparently suggested there would be both legal and technical difficulties. Digital Trends observes that there have been questions asked too about the type of infrastructure necessary to use the tax to fund those artists or organizations outside France's main (professional) cultural institutions. Reports vary as to the amount of money a 'Google tax' could raise. Cnet News talks about the equivalent of $28 million being raised, without making clear the time scale involved, while AFP mentions income of €50 million ($70 million) during the current year. Relations between U.S.-based Google and French authorities determined to protect their country's culture have not been particularly good of late. In December a Paris court instructed Google to pay damages and interest totaling €300,000 ($429,000) and stop scanning books held in U.S. libraries that had been published by the French company La Matiniere. The books could be scanned if Google received prior permission from La Matiniere.