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President Sarkozy adds his support to French Google tax plan

Tax is intended to compensate creators who lose out to online piracy

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French President Nicolas Sarkozy has added his support to a proposal to tax Google and other online advertising networks in order to compensate the creators of artistic and other works who lose out to digital piracy.

He called on the Minister for the Economy, Industry and Employment, Christine Lagarde, to investigate how much money the major international search engines and portals make from their online advertising activities in France.

"These companies are taxed in the country where they are headquartered, although they tap a significant part of our advertising market," Sarkozy said in a speech late Thursday to members of the French music and publishing industries.

Such leaks of tax revenue also distort competition, he said, adding that he would also call on the French competition authorities to give their view of whether Google held a monopoly position in the online advertising market.

"All businesses should be treated equally," he said. "It's only fair."

The online tax, a small percentage of revenue from advertising shown to French Internet users, was suggested by the authors of the "Creation and Internet" report commissioned last year by the Minister of Culture, Frédéric Mitterrand.

The tax they suggested would be honor assessed, with advertising network operators such as Google, Microsoft, AOL and Yahoo required to declare how much revenue they make, and could raise €10 million (US$14.3 million) a year for creators, the report's authors estimated.

Patrick Zelnik, Guillaume Cerutti and Jacques Toubon wrote the report. Zelnik is president of Impala, a network of independent record companies, Cerutti is a former head of the French consumer protection directorate and Toubon a former Minister of Culture and Minister of Justice known for championing a law enforcing the use of the French language in advertising.

Mitterrand asked the three to report on whether the range of music, films, books and other cultural products offered for legal download is attractive and reasonably priced, and on whether the creators of such products receive a reasonable proportion of the revenue derived from them.

Sarkozy also endorsed the report's proposal to force the music industry to offer their songs across all digital distribution platforms if they didn't negotiate such deals voluntarily within a year. Such a move is necessary, he said, because of the collapse in sales of CDs and the absence of a corresponding rise in online music sales.

By the middle of this year, Sarkozy also wants to give French teenagers vouchers worth €200 to spend on online music services, with half the cost to be subsidized by the government.

Young people, he said, have been conditioned by the press to expect online content to be free, where previously they had to pay for magazines and newspapers. That expectation is one of the reasons why young people won't pay for music, he said, and the goal of the music vouchers would be to get them used to paying for online music once again.

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