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In 1985, France introduced a tax on blank media, such as cassette tapes and CDs, to compensate rights holders for copies of their works made for private use. The main source of income today is smartphones; A levy of approximately 17 euros per sale means an annual payment to rights holders of almost 300 million euros. Coupled with the explosion of streaming and a system that hasn't changed for a decade, which critics describe as "dysfunctional," the tax is now facing new scrutiny.
When cassette recorders, VCRs, and similar devices hit the mainstream, entertainment companies with business models that depended on customers buying copies faced uncertainty.
The fear of consumer copies was summed up in the now-famous words of the MPAA's Jack Valenti: “The VCR is to the American film producer what the Boston Strangler is to the woman alone at home,” Valenti said.
In retrospect, the VCR did more to help than to hinder, but even so, privately made copies in the home were considered a significant threat with few enforcement options.
Private copy tax
Valenti's statement in 1982 reached a wide audience, but its essence was not new. The potential for blank media to undermine the creative industries led Germany to introduce a tax in 1966, usurping the exclusive right of reproduction with the right to equal remuneration.
In 1985, France introduced “remuneration for private copying” to ensure that rights holders were compensated for any damage caused by the private copying of their works. A tax was applied to sales of blank media, such as cassette tapes, but as technology advanced, the tax became applicable to CDs and other recordable media.
Today, smartphones are the main source of income from private copying, which, according to 2021 figures, generates around €300 million per year for rights holders.
The retreat begins
While an annual increase of €300 million is good news for beneficiaries, some believe the tax system is outdated and unnecessarily opaque. Since the price of a 64 GB or higher mobile phone is inflated by approximately 17 euros, regardless of whether something is copied to the device or not, some have described the tax as anti-consumer.
Compensation is paid to rights holders through the company Copie France, at rates decided by a committee composed of rights holders, recording media manufacturers and consumers.
A French government report on compensation for private copying published in October 2022 (pdf) He offered several proposals for improvement. Considering that rights holders themselves provide usage statistics, using methods dating back a decade, calculation methods must be transparently updated to reflect the reality of private copying today, in a market dominated by streaming.
French politician responds to government report
To the Report report published on Monday reveals proposals by MP Philippe Latombe in response to the government report.
Latombe's first proposal is to transfer decisions on the amount of tax applied to each media to the hands of the government.
“[I]Like the finance law or the social security financing law, parliamentarians must make decisions and be accountable to our fellow citizens,” explains the politician.
Latombe is not proposing an end to the existing panel (Private Copy Commission), but says its role should be to propose fees to parliament. L'Informe notes that the panel would also be prevented from initiating usage studies carried out by private companies at the expense of the tax fund. Instead, that work should be done by telecommunications regulator Arcom.
People who should not pay the tax, devices should not pay the tax twice
The parliamentarian also criticizes the current system according to which the tax is collected on smartphones and tablets at the point of import, something that forces professional end buyers who are not obliged to pay the tax to start a process to try to claim the excess. Overpayments are currently estimated between 40 and 50 million euros, which is why there is a call to simplify the process and guarantee faster refunds.
Latombe's third proposal consists of exempting refurbished smartphones and tablets in France, currently subject to a fee of 10 euros per unit. This would not only promote the use of the recycling market, protect the environment and create jobs, but also ensure that devices remain accessible to socially disadvantaged people.
