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French urge EC to pass tax hike on ISPs

Reform will close loophole and deliver $100 mil to CNC

DIJON — French film industryites are calling for the European Commission to greenlight an amendment to ramp up taxes on France’s powerful Internet service providers.

High-profile French and European players including Eric Garandeau, topper of Gaul’s state-backed film CNC film board, and Spanish filmmaker Fernando Trueba were among those debating the issue at the Dijon Film Meetings held by the Society of Writers, Directors, Producers (ARP), of which “The Artist” helmer Michel Hazanavicius is topper.

In France, the ISPs that distribute TV services via multiple-play offers — SFR, Free, Orange and Bouygues — pay a 4.5% tax on TV subscriptions that funds the CNC, which in turn hands out coin for French and European film production and distribution.

In 2011, that tax brought in €150 million ($195.3 million) of the CNC’s total budget of some $900 million.

But after operators started side-stepping the levy via a tax loophole, the CNC drafted an amendment to extend the tax to all telco subscription services, not just TV.

However, the proposal was thrown out on Friday by the European Commission on the grounds that it threatens the openness of the Internet, which Neelie Kroes, the EU’s digital agenda commissioner, is promoting.

That leaves the CNC, the foundation of Gaul’s industry, with a $100 million hole in its 2013 budget.

“The more we live in the digital cloud, the more we need to be anchored in real soil and a contextual identity to feel part of a specific History,” said CNC topper Eric Garandeau. “That is why the European Commission should respect all member states’ specific cultures and public ecosystems designed to nourish national cinemas, instead of constantly challenging and weakening them in the name of competition.”

Hazanavicius said, “We must defend our film financing mechanisms against Brussels’ liberal politics: our film financing regime has not only allowed France’s film industry to thrive, it’s also benefited European and World cinema.

“The Internet players — including ISPs and VOD platforms distributing services in France — must comply with France’s laws and regulations and it’s the role of politicians to make sure they do.”

French culture minister Aurelie Filippetti turned up at the confab to announce the EC’s decision and claimed Francois Hollande’s government, backed by the CNC and other media guilds, was committed to drafting another amendment that would still require ISPs to pay taxes on all their subscription revenues.

The next step will be for the Senate to approve the revised proposal. It will then be resubmitted to the EC.

The CNC and the EC have been clashing for months on France’s media regulations and film funding schemes, which the EC see as an obstacle to turning Europe into a more level playing field.

A flurry of Euro filmmakers have been vocal about their support for the CNC, including Trueba who reportedly called Kroes “public enemy No.1.”

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