France Looks At Google Tax

French lawmakers are considering taxing major Internet portals like Google to help the piracy-afflicted entertainment industry.

French Culture minister Frederic Mitterrand is looking at a government report that says Internet portals should be taxed on online ad revenues, and the money used to fund the development of legal online outlets for buying music, films and books.

The proposal, which is the latest idea to emerge from France’s bid to fight illegal file-sharing, apparently has the tacit approval of President Nicolas Sarkozy.

Although Sarkozy hasn’t specifically mentioned taxing Google or other sites such as Microsoft, AOL, Yahoo and Facebook, he’s said to be keen to push forward with several of the report’s ideas about the online ad sector.

Impala Vice President Patrick Zelnick, one of the independent music organisation’s fiercest critics of the Sony-BMG merger, helped lead the commission and believes the plan to tax the portals is “inevitable.”

He told Liberation newspaper it would “maintain a certain pluralism in the culture world” and prevent the “endless enrichment of two or three world players who will impose their cultural formatting on us.”

Critics of the plan say it would be messy to implement and that Internet portals would shoulder an unfair share of the burden.

“Where does it start and stop? The argument is that Google has culpability for declining music revenues because people start searches for illegal files often by Google,” said Forrester Research vice president Mark Mulligan. “But what about the computers? Because without the computer people wouldn’t be able to download. And then what about the electricity that powers the computer?” he said.

The government commission, which also included former culture minister Jacques Toubon and Sotheby’s auction house president Guillaume Cerutti, concluded that its most urgent goal was to promote legal music sales over the Internet.

One way to do that, the report suggests, is to offer youths a card for buying online music, which would be partially government-subsidized.

The tax on Web portals and Internet service providers would help pay for the subsidies as well as for a publicity campaign to promote the music cards.

The proposal is still in its early stages and the report doesn’t explain specifics – such as how much new tax the portals would pay – but some news stories suggest the numbers may not stack up.

The report is said to estimate the tax may eventually bring in euro 10 million per year, although it looks as if it will be a long time before any of it gets distributed. The estimated setup costs are about euro 50 million in 2010, and then somewhere between euro 35million and euro 40 million in the following two years.

Sarkozy’s government is making efforts to regulate the Web and protect intellectual property online. Lawmakers recently passed legislation that would disconnect people caught illegally downloading music and films.

Implementing it has become a tougher task. The country’s Commission nationale de l’informatique et des libertés (CNIL), which was created in the late 1970s to vet new legislation for privacy concerns, isn’t happy it meets with its criteria that “information technology must respect the human identity, the human rights, privacy and liberties.”

The law should have come into force Jan. 1 but the CNIL is stalling over giving its approval.