Taxes to fund public TV ‘should be scrapped’

France and Spain ordered to stop taxing telecoms firms to generate money for public television.

The European Commission today (30 September) ordered France and Spain to scrap taxes imposed on telecoms companies to fund public television. It said that the taxes contravene EU law.

The Commission’s decision threatens reforms introduced in both countries that ban public television from running commercial advertising.

Both countries’ reforms work on the basis that the revenue lost to public broadcasting by the bans on advertising is recouped by taxes on the telecoms sector.

The French tax was introduced in March 2009. Telecoms firms are taxed at 0.9% of total revenues exceeding €5 million. The annual revenue from the tax is estimated at €400m.

The Spanish tax entered into force in September 2009. It is set at 0.9% of total revenues, and generates approximately €230m per year.

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The Commission said that the taxes were incompatible with EU legislation limiting the kinds of charges that can be imposed on telecoms firms.

Charges must “be specifically and directly related to covering the costs of regulating the telecoms sector”, the Commission said.

Its decision means that France and Spain have two months to abolish the taxes. If they do not, the Commission can take them to the European Court of Justice.