Reding, Sarkozy at odds on Web tax


BRUSSELS -- French president Nicolas Sarkozy's call for an Internet tax has been dismissed by EU Information Society and Media Commissioner Viviane Reding, who told attendees at a conference in Munich that such a measure would only hinder the development of new applications and content.

"Taxation of the new technology might not be the right way in order to arrive at the goal of seamless use of new communication by all citizens," Reding said at the Digital, Life, Design 2008 conference.

Reding said that Sarkozy's plan would reverse the initiatives she had taken to ensure that all Europeans had cheap and easy access to the Internet.

Earlier this month, Sarkozy proposed funding France's state-owned television stations through an Internet tax as part of his plan for rationalizing the state's sprawling audiovisual empire. He is still firmly against advertising on public channels, but said that income lost from the ad ban will be compensated in part by "an infinitesimal sales tax on new communication methods, like Internet access and mobile telephony."

A flat monthly surtax of just €1 ($1.50) on each of France's 16.1 million Internet accounts would raise about €200 million ($290 million) per year -- or nearly 25% of the €820 million ($1.2 billion) in annual revenue public TV will lose to an advertising ban.

And with average monthly Internet access in France costing about $37, roughly 37% below the norm for OECD members, there is potential for a price hike.

However, economists and communications experts are almost universally agreed that the use of the Internet should remain free, and a tax would merely stunt economic growth.