Sarkozy to abolish GDP, defend against sovereign funds and other predators
Buried at the end of an IHT article on French president Nicolas Sarkozy's plan to tax the Internet and raise levies on blank media is this doozy: abolishing gross domestic product in favor of a better metric of happiness, and defending the economy "sovereign wealth funds and other financial predators."
In the 45-minute speech, Sarkozy declared the death of the 35-hour week, suggested that large companies may have to double or triple the part of their profit they are obliged to share with employees and vowed to replace gross domestic product with a more holistic indicator of economic welfare that he has commissioned from two Nobel laureates in economics, Amarthya Sen and Joseph Stiglitz. He also said that he would put a state bank in charge of defending French industry against sovereign wealth funds and other financial predators.
Sarkozy proposes taxing new technology to finance the old
By Katrin Bennhold and Victoria Shannon
PARIS: In a move that could profoundly reshape the media landscape in France, President Nicolas Sarkozy on Tuesday proposed banning commercials from public television and making up for some of the lost revenue with a first-of-its-kind tax on the Internet and mobile phones.
A government tax on Internet connections would be virtually without precedent and could be politically controversial, given that public policy experts say that Internet access drives a country's economic growth and productivity.
But France, like other countries around the world, is struggling to find ways to keep cultural industries, like video and music, afloat at a time when their traditional audiences are waning.
Sarkozy, proposing "a real cultural revolution" and stressing twice that his proposal was "unprecedented," said: "I want us to profoundly review the requirements of public television and to consider a complete elimination of advertising on public channels."
Instead, he said, those channels "could be financed by a tax on advertising revenues of private broadcasters and an infinitesimal tax on the revenues of new means of communication like Internet access or mobile telephony."
Analysts point out that the Internet and mobile phones are relatively new and still-developing economic and communications tools, while traditional television and other mass media are drawing fewer and fewer viewers.
"This could be seen as drawing on new technology to fund old technology," said Taylor Reynolds, economist at the Organization for Economic Cooperation and Development, based in Paris.
Some observers cautioned that the proposal was still under review, but others noted that the announcement contained enough information to suggest that Sarkozy, a close friend of Martin Bouygues, whose namesake construction company owns TF1 as well as a mobile phone carrier, was serious about the plan.
Sarkozy's director of communications, Franck Louvrier, said the president was determined to implement the measures this year. "The goal is to wrap this up in 2008," Louvrier said.
Within minutes of the midday announcement, the shares of private broadcasting companies TF1 and M6 jumped in anticipation of less competition for lucrative advertising contracts, gaining 9.9 percent and 4.5 percent respectively.
TV advertising in France increased by 7 percent to €6.7 billion last year, according to Yacast, a market research firm. TF1's channels accounted for €3.3 billion, while state-owned television company France-Televisions attracted €1.18 billion. The benefit of public broadcasters no longer competing for advertisers would far outweigh any tax on advertising revenue, analysts said.
This would not be the first time France has been a leader in proposing changes in the digital economy. In 2006, French legislators approved a controversial law that would have reduced the penalties for the illegal downloading of music to little more than a parking fine; key parts of the law were later overturned.
Some people in France have also lobbied for a "global license" that would essentially levy a fee on Internet users that would pay musicians and others in the music industry for revenue theoretically lost because of digital music piracy.
For Sarkozy's proposal to become policy, his government would have to draft a bill which would have to be approved by both houses of Parliament. The Culture Ministry has set up working groups to review a 1986 broadcast law and present a reform proposal by the spring of 2008, an official said. The earliest these measures could take effect is Sept. 1, but more likely, industry insiders said, was Jan. 1, because of a busy parliamentary agenda and municipal elections in March.
In France, competition for Internet customers is intense, resulting in prices that are well below those of elsewhere, and an "infinitesimal" tax would presumably not discourage potential subscribers. The French pay an average of 37 percent less than the OECD average, or $36.70 a month as of October, compared to $49.36 for all 30 countries belonging to the group.
The share of residents with fast Internet connections in France is also slightly higher than elsewhere - 22.5 subscribers per 100 inhabitants, compared to 18.8 for the OECD as a whole.
But policy experts mostly advise making the Internet cheaper and not weighing down its growth with extra charges. The U.S. Congress last year extended a federal moratorium on Internet taxes for the next seven years.
While it is far from widespread, there are a few other examples of government levies on new technologies or communications to help older ones. In Europe, many countries tax blank storage media like CDs and devote that money to support music. Turkey and South Korea have also used telecommunications taxes to raise money for other industries.
Sarkozy's proposal was part of a dense salvo of measures fired off in a New Year's speech aimed at redirecting the focus from his Hollywood-style love affair with the Italian singer Carla Bruni to his vision for France.
In the 45-minute speech, Sarkozy declared the death of the 35-hour week, suggested that large companies may have to double or triple the part of their profit they are obliged to share with employees and vowed to replace gross domestic product with a more holistic indicator of economic welfare that he has commissioned from two Nobel laureates in economics, Amarthya Sen and Joseph Stiglitz. He also said that he would put a state bank in charge of defending French industry against sovereign wealth funds and other financial predators.
