France's 'Culture Tax' Could Hit YouTube and Facebook

Should YouTube subsidize le cinéma français? France’s audiovisual regulator thinks so. In a report this week, the Superior Audiovisual Council (CSA) says that video-sharing websites should be subject to a tax that helps finance the production of French films and TV shows.

The so-called culture tax, totaling more than €1.3 billion ($1.8 billion) annually, is paid by movie theaters, broadcasters, and Internet service providers in France. The CSA contends that YouTube, French video-sharing site DailyMotion, and their ilk are effectively providing video-on-demand services, which are already subject to the tax.

Although the CSA report says that videos posted online by private individuals should not be subject to taxation, it contends that video-sharing sites increasingly have become “professional” content providers. “They have developed partnerships with audiovisual editors and content providers, with which they share advertising revenues.” The sites also create original programming, such as a Dailysport service created by DailyMotion and some 60 channels offered by YouTube to its French subscribers, the report says.

Google’s YouTube is by far the biggest provider of online video in France, with an estimated 30.6 million monthly unique visitors, according to the CSA. DailyMotion is in second place with 15.1 million visitors. And to the extent Facebook and other social media sites are content providers, they should be taxed as well, the CSA says.

Separately, France is considering a tax on smartphones, tablets, and other devices as another source of revenue for cultural subsidies. A government-commissioned report, released in May, said that a sales tax of 1 percent should be imposed on electronic devices capable of accessing movies, music, and other content. The proposed tax would raise an estimated €86 million annually that would be used to finance the “cultural industries’ digital transition,” France’s Culture Ministry said at the time.

Trade associations for French Internet and technology companies spoke out against the proposal, which the government has not yet acted on. Rejecting the government’s assertion that a 1 percent tax would be “painless,” the groups warned in a statement in July that the government should be encouraging growth of the digital economy, rather than taxing it.

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