France set to tax smartphones to protect culture in digital age

Last updated: May 13, 2013 6:51 pm

France set to tax smartphones to protect culture in digital age

By Hugh Carnegy in Paris

France is preparing to tax smartphones, tablets and all other internet-linked devices to help fund the production of French art, films and music.

The proposal was made in a government-commissioned report that was broadly endorsed by President François Hollande’s socialist administration.

In a trenchant defence of France’s “exception culturelle” in the digital age, the report proposed imposing a tax of up to 4 per cent on the sale of all devices, including gaming consoles and e-readers, that allow access via the internet to “cultural content”.“Companies that make these tablets must, in a minor way, be made to contribute part of the revenue from their sales to help creators,” said Aurélie Filippetti, culture minister. The new tax could be included in next year’s budget, she added.

The report said it was legitimate for the authorities to intervene to “correct excessive imbalances” in the digital economy. “They can use taxation to make actors that don’t directly exploit content, but which profit from its circulation, contribute to its creation.”

But DigitalEurope, which lobbies in Brussels for smart phone makers such as Apple and Samsung, said the tax was “a move in the wrong direction”.

Pierre Lescure, a former head of Canal Plus, the television channel, was commissioned by Mr Hollande to make recommendations on how France should adapt its commitment to preserving French-language culture in the fast-changing digital era.

The country has long had a system for funding film-making via taxation on television companies and other distributors and enforces quotas on French music on broadcasters. Mr Lescure said this was under “immense threat” by the domination of big international actors that can now circumvent such protections.

Mr Hollande, who has insisted “l’exception culturelle” must be excluded from forthcoming trade negotiations between the EU and the US, said in a statement welcoming the Lescure report that he was “fundamentally attached to the defence” of French culture.

Ms Filippetti said a smartphone tax would be at a “very low level”. The report said it would have to be kept low to avoid punishing consumers and provoking a black market. It said an initial tax of 1 per cent would raise €86m, but this could be raised to 3 or 4 per cent. It pointed out that it would not hit jobs in France as the companies affected employed few people in the country.

France already raises almost €200m a year in copyright levies imposed by many EU countries on hardware storage to compensate artists for the loss of income through private copying.

The smartphone tax was one of 80 proposals included in Mr Lescure’s 500-page report. They included substituting an existing levy on French telecoms operators that helps subsidise film-making with a new tax based on their revenues.

It proposed scrapping a system introduced under former president Nicolas Sarkozy that imposes penalties and a ban on internet connection for those guilty of illegal downloading. It also called for much shorter statutory delays in the release to video of films and foreign television series to combat pirating.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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