German Patent Office Wants To Tax PCs

by Ulrika Lomas, Tax-News.com, Brussels

10 February 2003

Although the UK, Ireland and Luxembourg are exceptions, most EU Member states apply levies to the sale of photocopiers, video recorders and blank cassettes in order to compensate copyright owners for revenues lost through illegitimate copying. Some states, including France and Germany, have gone further, imposing the levies on digital copying equipment, such as recordable CDs, DVD players and scanners.

Now the German Patent Office has recommended that a levy of 12 euros should be imposed on the manufacture of PCs. Germany has led the European campaign to tax hardware sales in order to recover 'lost' copyright revenues; in June, 2001, Hewlett Packard was ordered by a German court to pay a copyright levy on the sales of its CD burners over a three-year period.

The German proposal will be fiercely opposed by manufacturing industry. The European Information and Communications Trade Association (EICTA), an IT and telecoms industry group whose members include Microsoft, Fujitsu, Alcatel, Nokia and Siemens, wrote recently to the European Commission warning about the consequences of further extensions of the 'levying' principle. Says EICTA: “the extension of copyright levies to digital devices and media is harmful to European consumers, creators and industry. Levies increase the price of products such as personal computers, consumer electronics devices and storage media which permit Europeans to be full participants in a dynamic information society.”

EICTA believes that technical protection measures and digital rights management systems are better ways of dealing with the problem of unlicensed copying.

Since the US and most major Asian manufacturing locations for digital goods do not have such levies, taxes imposed by EU countries on manufacturers can only harm the competitive position of European firms. The EU's answer is more protectionism, of course, and the consumer is the eventual loser.

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