France considering new tax on smartphones and tablets

Move could cause relations between France and the tech world to become strained even further

Relations between the tech world and France do not have the best relationship, to say the least, with technology companies often accusing the French government of being intrusive and unfriendly. A perception that was reinforced when Yahoo's acquisition of DailyMotion fell apart because of meddling by the government.

And now France is thinking of going ahead and pulling a move that will certainly cause relations to become strained even further.

Due to a slumping economy, France is looking for new ways to fund its cultural projects, which are shielded from cuts. And the way they want to do it is by levying a new tax on technology companies, notably Apple and Google, according to a report by Reuters Monday. 

The idea was floated by former Canal Plus CEO Pierre Lescure, who was reportedly asked by the government to find new ways to fund the projects. 

In a report, Lescure recommended taxes on sales of smart-phones and tablets, namely Apple's iPhone and iPad and Google Android products. Television users, TV and radio broadcasters and Internet service providers already pay a tax to to fund art, cinema and music in France, but Google, Apple and Amazon do not.

According to Lescure, the new tax could help the funding because consumers are now spending more money on hardware than on content.

President Francois Hollande is set to decide whether to go ahead with the proposal by the end of July.

The proposed tax is coming at a particularly bad time for relations between France and the technology world, after the government scuttled a deal which would have seen Yahoo purchasing a majority stake in DailyMotion.

Yahoo had been in talks to purchase a controlling stake in online video website Dailymotion, in order to take on Google and YouTube. Those talks escalated quite far, with Yahoo, which was said to be considering purchasing as much of 75% of the site, signing a provisional deal to buy control of the online-video website from France Télécom SA.

But that was before Yahoo's chief operating officer, Henrique de Castro, and France Télécom's chief financial officer, Gervais Pellissier, had a meeting with French Industry Minister Arnaud Montebourg.

In that meeting, Montebourg told de Castro and Pellissier that he did not want sell such a large stake of "a rare French Internet success story" to be sold to an American company. 

"I won't let you sell one of France's best startups," Montebourg is quoted as saying to Pelissier. "You don't know what you're doing."

Montebourg is said to have then offered Yahoo a chance to buy a stake in the company without having majority control, an offer which Yahoo declined. 

Yahoo has since moved on, and is reportedly interested in buying Hulu instead. Meanwhile, DailyMotion remains unsold, and the incident also exposed some tension between Montebourg and Finance Minister Pierre Moscovici, who was forced to deny having approved the deal in the first place.

With all that going on, perhaps now is not the time to give tech giants even more reason to be warying of doing business in France. 

Vator has reached out to Google and Apple to get their perspective on this proposed new tax, but neither was available for comment. 

(Image source: https://notverycool.com)