France to introduce 'Google tax'

The French senate has agreed to levy a tax of one per cent on online adverts, starting in January 2011.

The measure, dubbed the 'Google tax' was first floated in the Zelnick Report as a way of propping up French newspapers.

Whether the revenue the tax brings in will find its way to the newspapers, however, is another matter. It may be more likely to be spent on posh aeroplanes for M. Sarkozy.

Philippe Marini, head of the finance commission, who proposed the amendment to the French upper house, said television and newspaper advertising is subject to taxation so the current status quo represents a 'distortion of competiton'

"A tax on advertisiers is the only solution," he said, "bearing in mind that the main sellers of online advertising space - such as Google - are located outside France."

It's not yet clear how the system will work in practice.