Google tax

France could start taxing Internet advertising revenues from online giants such as Google, using the funds to support creative industries that have been hit by the digital revolution, a French newspaper reported on Thursday.

The proposal is one of several put forward in a government-commissioned survey, and continues France's tradition of tight legislation on Internet use. France already has some of the toughest web piracy laws in Europe, and President Nicolas Sarkozy has repeatedly tried to present himself as a defender of France's cultural heritage in the digital age, most recently calling for public projects to rival Google's plans for a massive online library.

Proposals from prominent men

Guillaume Cerutti, one of the authors of the report, told newspaper Liberation that the levy, which would also apply to other operators such as MSN and Yahoo, would put an end to "enrichment without any limit or compensation."

The paper also said the tax would apply even if the operator had its offices outside France, as long as the Internet users who click on ad banners or sponsored links are in the country.

Cerutti, president of Sotheby's in France, drew up the report together with former Culture Minister Jacques Toubon and Patrick Zelnik, a former music executive, whose work also includes producing the songs of France's first lady, Carla Bruni-Sarkozy.

Extra investment in creative industries

The three authors also suggest taxing Internet service providers to raise tens of millions of euros that would be invested in developing the online music business and other creative sectors.

The report estimates that the tax could raise up to 50 million euros ($70 million) this year. Zelnik added that the tax would take "a small percentage" of Google's online ad revenues, which he estimated at 800 million euros a year in total, according to Liberation.

Zelnik told the newspaper that taxing online ads "seemed inevitable if we want to preserve cultural pluralism and prevent... the never-ending development of two or three world players."

The French society of authors and composers SACD said it was "satisfied" with the proposals which would "encourage and stimulate the legal availability of works to the public."

Industry criticism

But the proposals have faced criticism from think-tanks and other commentators. The digital media think tank Renaissance Numerique, whose members include business leaders, said the tax proposal penalised advertisers unfairly.

"Let's stop demonizing the Internet and consider the benefits the web brings," said its co-president Christine Balague in a statement. "Neither online advertisers nor Internet service providers are robbing artists," he added. "Quite the contrary: they are taking part in bringing consumers and artists together."

The new report was handed in to the Culture Ministry in Paris earlier this week. It was not immediately clear if the government has a timetable for acting on it.

bk/AFP/Reuters

Editor: Susan Houlton