PARIS President Francois Hollande will decide by the end of July whether France should impose new taxes on technology giants like Apple and Google to finance cultural projects, a move that could feed into an anti-business image days after a spat with Yahoo!.
The Socialist government asked former Canal Plus (VIV.PA) CEO Pierre Lescure to find new ways of funding culture during an economic downturn, in line with France's "cultural exception" argument that such projects must be shielded from market forces.
While far from becoming laws, the proposals could worsen tension between France and technology giants after Industry Minister Arnaud Montebourg blocked an attempt by Yahoo! (YHOO.O) to buy a majority stake in French video clip site Dailymotion.
The run-in reignited a debate on state intervention in the economy, angered the firm's French parent company and exposed discord between Montebourg and Finance Minister Pierre Moscovici, who denied having approved the move.
Lescure's report said taxes on sales of smart-phones and tablets, namely Apple's (AAPL.O) iPhone and iPad and Google (GOOG.O) Android products, could help fund culture because consumers were spending more money on hardware than on content.
The proposed tax would mirror fees already paid by television users, TV and radio broadcasters and Internet service providers to fund art, cinema and music in France, but which Google, Apple and Amazon (AMZN.O) are now exempt from paying.
"Companies that make these tablets must, in a minor way, be made to contribute part of the revenue from their sales to help creators," Culture Minister Aurelie Filipetti told journalists.
Hollande's office said in a statement that he wanted lawmakers to review legislation based on the report's recommendations by the summer. Parliament goes into recess at the end of July and returns in mid- to late September.
Filipetti added that the "culture tax", which she said would be "minimal and widely distributed", was likely to be included in a budget law to be submitted to parliament in November.
French officials are also pushing to ensure that French cultural products, and notably the audiovisual sector, remain exempt from free trade rules during talks on a planned trade agreement between the European Union and the United States.
U.S. President Barack Obama is travelling to Europe next month to launch the talks, which would create the world's largest free-trading bloc if they were successful.
After months of public criticism of Google, France in January abandoned trying to make it pay newspapers for publishing links to articles, settling for a pledge by Google to invest 60 million euros in a fund to support news production.
In Germany, publishers Bertelsmann SE and Axel Springer (SPRGn.DE) also backed down from a similar push after a court let Google publish links and previews to their content for free.
Last October, Google denied a newspaper report saying it received a 1 billion euro tax claim from the French state.
In Britain, Google has stirred the ire of lawmakers for the way it pays almost no income tax on billions of dollars of UK sales each year. [ID:nL6N0DQ3RB] [ID:nL6N0DK2WJ] (Reporting by Nicholas Vinocur and Marine Pennetier, editing by Mark Heinrich)