Sarkozy Proposes New Tax On Internet

by Ulrika Lomas, Tax-News.com, Brussels

09 January 2008

French President Nicolas Sarkozy, in a speech on Tuesday, unveiled new proposals for an internet-based tax, as part of a range of new levies to fund France's state broadcasters.

In his first full press conference at the Elysee Palace since becoming President last year, Sarkozy outlined plans to scrap advertising on France's two public television stations, with the ensuing revenue shortfall to be plugged with a tax on internet connections, mobile phone usage and a levy on the advertising revenues of commercial television stations.

Sarkozy promised that any tax on internet users would be "infinitesimal", but his idea is controversial, and some observers see the plan as taxing the new media to help fund the old. France would also stand out as one of the only countries to raise revenues from taxing internet access, something which other governments have so far shied away from.

Sarkozy's plan is part of his desire for a "cultural revolution," at the centre of which would be a publicly-funded television broadcaster operating along similar lines to the UK's BBC.

"I want the requirements of public television to be modified in depth and to look into the possibility of completely scrapping advertising on public channels," Sarkozy told the news conference, adding that this could mean public channels be "funded by a tax on the increased advertising revenue of the private channels and an infinitesimal tax on the revenue of new communication means such as internet access or mobile phones".

Advertising on France's publicly-owned France-Televisions was reportedly worth EUR1.18 billion (USD1.73 billion) last year, but French private television channels have been boosted by the possibility of less competition for advertising revenue, with shares of companies such as TF1 and M6 rising after Sarkozy's announcement.

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