The taxman rings again

8 January 2010 By Pierre Briancon

Nicolas Sarkozy wants to tax Google on its French business, while an official report suggests the tax could help subsidize content industries. If enacted, the proposals will mostly hamper the growth of Internet advertising, and hurt its supposed beneficiaries.

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Nicolas Sarkozy, France's president, has asked his finance ministry to study ways to tax "advertising revenues of international big portals and search engines operating in France". Those companies currently pay taxes in their home countries while they "take away part of our advertising market", Sarkozy added in a speech on Jan. 7. He also called for an official inquiry by France's competition watchdog into Google's possible domination of the online advertising market.

A governmentcommissioned report on "online cultural supply" had suggested the day before a levy of 12 percent on French online advertising revenues, which would help partly subsidize the music industry.

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