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French Telecoms Tax Falls Short

by Ulrika Lomas,, Brussels

23 August 2010

The controversial taxes levied on private television channels and on telecom operators in France are reportedly generating far less than previously anticipated. Indeed the product of these taxes is proving insufficient to achieve the government’s intended aim of financing the ban on advertising on public television (France Télévisions).

Designed to improve the overall quality of programming on France Télévisions at the request of the French President Nicolas Sarkozy, the ban on evening advertising on public channels was to be financed by the introduction of two new taxes, levied on the turnover of both television channels and telecom operators.

Nevertheless, in 2009 these taxes generated a total of only EUR215m (EUR366m expected this year), far less than the EUR450m initially predicted. The tax imposed on television channels only served to generate EUR28m last year (EUR36m expected in 2010), significantly lower than the government’s original estimate of EUR80m. Regarding the tax levied on telecom operators in France, the government once again failed to achieve its target revenue, generating a mere EUR186m last year (EUR330m predicted for this year) compared to the annual figure of EUR380m initially announced.

Intensive lobbying from the companies concerned undoubtedly accounts for a significant amount of the shortfall in revenue. Indeed, the tax imposed on television channels, which was originally levied at a rate of 3% on publicity revenue, was reduced. The tax base for the levy imposed on the country’s telecom operators was also reduced, with the sale and hiring of equipment excluded.

Given the fact that the government, which has guaranteed the budget for France Télévisions, is currently paying the shortfall from the general budget, it is rather unsurprising that its plan to abolish daytime advertising from the end of 2011 has been challenged by members of the President’s own Union for a Popular Movement (UMP) party. Rather ironically, daytime publicity revenues have increased significantly of late, reaching EUR318m in 2009 and marking a 24% increase compared to the previous year.

In view of mounting opposition, and by way of a compromise, the government could decide to delay the total ban on advertising by one to two years. A final decision is expected at the beginning of September.

TAGS: tax | commerce | budget | e-commerce | France | telecoms

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